Akkreditivbroschre en

Greater Security in International Trading
Documentary Credits Documentary Collections

Credit Suisse
www.credit-suisse.com
SOLS 2 4540004 8.2008
CREDIT SUISSE AG
P.O. Box
CH-8070 Zurich
Documentary Credits Documentary

Collections
10th revised edition, 2008

Published in German, English and French
CREDIT SUISSE AG
Contents
1.
Risk and Security in International Trade
2.
A.
B.
Instruments for Securing Payment

Documentary Credits
Documentary Collections
3.
Case Study and Countertrade
4.

Appendix

List of Terms
Index
List of Figures
Bibliography
For simplicity, masculine forms are used to designate both genders

throughout this text.
3
13/79
15
81
93
103
Abbreviations
AG
Stock corporation
Art.
Article
BGE Swiss Federal Supreme Court ruling, Official collection of judgments by the
Swiss Federal Supreme Court, Lausanne 1875 et seq.
CFR
Cost and freight
CIF
Cost, insurance and freight
CS
Credit Suisse
EFTA
European Free Trade Association
EU
European Union
eUCP
Supplement to UCP 600 for electronic presentation (English only)
Fig.
Figure
FOB
Free on board
ICC
International Chamber of Commerce
ISP98
International Standby Practices 98
L/C
Letter of credit
Ltd.
Limited company
SCO
Swiss Code of Obligations
UCP
Uniform Customs and Practice for Documentary Credits
URC
Uniform Rules for Collections
1. Risk and Security in International Trade
A.
Operating Environment
B.
Risks
C.
Protection against Risks
D.

Instruments for Securing Payment: an Overview

1. Documentary Credits
2. Documentary Collections
3. Payment Guarantees
9
9
10
10
E.
Bank Guarantees as Protection against Non-Performance
11
F.
Disputes Related to ICC Instruments
11
1. Risk and Security in International Trade

A. Operating Environment
Switzerland has few natural resources and only a relatively small
domestic economy. However it benefits from a high degree of
industrial specialization and a well-developed services sector. All
this means that the Swiss economy is extremely dependent on
foreign trade. In 2006, for example, exports of goods and services accounted for no less than 54% of GDP, while imports
were also very high at 46%. This reliance on international trade
brings both risks and opportunities. On the one hand, it makes
it easier for Switzerland to access new markets, on the other it
leaves Swiss businesses more exposed to tougher international
competition and increases dependence on global economic
activity.
In the past few decades, ongoing globalization has led to an
improvement in general prosperity and a shift in the economic
operating environment. Foreign trade has been boosted, thus
extending the international division of labor. The result has been
greater specialization of value creation in areas of production
with a comparative advantage. For producers and consumers,
closer integration and worldwide interdependence of markets
have opened up the possibility of better exploiting economies of
scale. In addition, productivity-enhancing investments and innovations have been encouraged. More intense competition is
reducing profit mark-ups, and causing sources of economic
inefficiency to dry up. In this new world, only high-performance
companies can survive.
New developments, particularly in technology and telecommunications, mean that the utopia of a global village is increasingly becoming reality and intensifying the war for talent.
Because there is also greater insecurity in the world, these
changes are accompanied by a considerable potential for conflict. As new markets emerge and open up in Eastern Europe,
Asia and Latin America, new opportunities for growth are presenting themselves to innovative, flexible companies and to the
world economy as a whole. Consequently, the demand for international trade finance and project finance is also rising.
An important complement to the free trade agreement of 1972
are the seven bilateral agreements between Switzerland and the
European Union that entered into force in mid-2002. As a result,
the free movement of persons was introduced between Switzerland and the EU-17/EFTA on June 1, 2007. This creates a
better operating environment for Swiss companies with strong
economic ties and interests in Europe. For export companies,
estimating and hedging against currency fluctuation between
the franc and the euro is a central challenge. There is still a great
need for payment and performance guarantees for business in
less well-known and higher-risk markets outside the EU.
B. Risks
Many of the trends outlined above involve heightened risks for
exporters. From their point of view, security of payment has
therefore become increasingly important. At the same time, they
are encountering a greater awareness of risk among their
buyers. They often have to provide far-reaching guarantees of
their willingness and ability to meet contractual commitments.
Otherwise they will not even be considered for the contract.
This even applies to Swiss importers, whose impeccable payment record used to be regarded as sufficient security. Their
suppliers want assurances of their willingness and ability to meet
their financial obligations. Suppliers insistence on security of
payment can result in complicated formalities that conflict with
the importers desire to receive the goods in perfect condition
and without delay.
Trading firms that act as middlemen are concerned with both

sides of the problem. In addition, they sometimes have to provide short-term financing for consignments in transit, i.e. they
have to pay the supplier, or provide an assurance of payment,
before receiving payment from the buyer.
The risk of loss in an international transaction relates partly to
the possible behavior of the other contracting party and partly to
the political and economic situation in the foreign country or
countries concerned. The same types of risk have different
causes, depending an whether they involve the buyer or the
seller. The following tables provide an overview of the various
types of risk and the most important possible causes of
loss.
Risks Relating to the Contracting Party (Fig. 1)

Type of Risk
Credit (del credere) risk
Cause of Loss to the Exporter

Buyer unable or unwilling to pay
Manufacturing or performance risk
Importer cancels or unilaterally modifies

the order
to the Importer
Exporter unable or unwilling to refund
advance payments
Exporter unable to execute the contract
for technical or financial reasons
Exporter unwilling to perform under the
contract
Risks Relating to the Economic and/or Political Situation in the Country of the Contracting Party or in Other
Countries (Fig. 2)
Type of Risk
Political risk
Transfer risk
Exchange risk
Cause of Loss to the Exporter

Importer prevented by political events or
official actions (war, revolution, import
bans, confiscation, etc.) from carrying
out his side of the contract
Governments or other public sector
entities refuse or are unable to make
payment in the agreed currency
(moratorium)
Contract currency depreciates against
exporters currency
to the Importer
Exporter prevented by political events or
official actions (war, revolution, embargoes, etc.) from carrying out his side of
the contract
Guarantee payments or refunds of
advance payments rendered impossible
Contract currency depreciates against

importers currency
C. Protection against Risks

The risks involved in international trade have to be carefully
assessed. This is no easy matter, especially in the case of major
contracts that run over several years, e.g. large-scale construction projects or contracts for the purchase of industrial machinery
with long manufacturing times. Banks have vast practical experience in this field and can therefore make an important contribution to the smooth execution of international transactions,
whether these are straightforward or more complex. When planning and negotiating big projects, it is therefore advisable to call
in a competent bank at an early stage.
If the buyer and seller are both Swiss, each party can usually be
reasonably sure that the other will meet its obligations. It is an
easy matter to check up on the other partys creditworthiness
and business reputation. Moreover, any legal proceedings or
debt collection measures will come within the jurisdiction of the
courts and authorities of the country concerned. Domestic
transactions are therefore normally settled on open account,
i.e. the seller presents his invoice only after the goods or services have been supplied.
When doing business with less well-known foreign firms, a contract of sale does not always provide the same sound and reliable basis as it does in the domestic market. In fact, the security
provided by a simple contractual undertaking on the part of a
foreign company can only be considered adequate if the parties
have a long-standing business relationship or a strong common
interest (e.g. financial ties). Stable political, economic and legal
conditions in the foreign country are also a necessary prerequisite. Otherwise, both parties will want additional security.
Securing Payment (Fig. 3)

The aim is to ensure prompt payment for goods or services.
These instruments therefore serve primarily to protect the interests of the seller/exporter.
Importer
Buyer
Bank pays when

goods/services are
supplied and debits
the importer (buyer)
Goods/services
supplied
Exporter
Seller
Securing Peformance (Fig. 4)

The aim is to ensure performance of the contract by the seller.
These instruments protect the interests of the buyer/importer.
Importer
Buyer
The buyers and sellers ability to insist on effective security

arrangements will depend largely on the two parties respective
negotiating strength. This depends in turn on their relative market positions.
For example, a confirmed irrevocable documentary credit provides the seller with an assurance that he will be paid promptly
against presentation of the correct documents. The advantages
for the buyer, however, are less clear. Indeed, from his point of
view, a documentary credit has a number of disadvantages:
He
usually bears the cost of the documentary credit.

is obliged to make payment as soon as the correct documents are presented to his bank, whereas the seller is at
liberty to present the documents or not and is therefore free
of any obligation until the moment he avails himself of the
credit.
A documentary credit ensures that payment will be made only
against the stipulated documents, but it offers no guarantee
that the goods will be delivered or the service rendered in
accordance with the terms of the contract.
He
Goods/services
not supplied
Bank pays when

goods/services are
not supplied and
debits the exporter
(seller)
Exporter
Seller
A buyer is therefore unlikely to apply for a documentary credit

on his own initiative. As a rule, he will only agree to this method
of payment if the seller demands it and if there is no other equally
good supplier who does not. This is what happens in a sellers
market and it is in practice a rare occurrence.
In this kind of market, sellers do not need to worry about finding
buyers, which means that they are in a strong position (e.g. a
monopoly). They can therefore demand maximum security of
payment (e.g. a documentary credit opened by the buyer).
The buyers need for security depends on the conditions of
contract relating to the sellers obligations. If he is the sole buyer
and can choose between a number of suppliers, he will be able
to obtain the security he wishes in almost every case. This is
the situation in a pure buyers market.
In this kind of market, the buyer is in a strong position and
can therefore demand the highest possible security (e.g. a
bank guarantee from the seller).
The banks offer a wide range of instruments designed to meet
the differing security needs of buyers and sellers. Each case
has to be examined on its merits in order to ascertain which
instruments are necessary and appropriate. In practice, some
sort of balance is usually struck between the interests of the
two parties. Instruments for protecting the interests of buyers
and sellers can then be used in combination, as outlined in
Chapter 3.
The following two sections summarize the principal services
offered by the banks in this connection.
D. Instruments for Securing Payment: an Overview

The two principal instruments offered by the banks for executing
and securing payments in international trade are documentary
credits and documentary collections. In certain circumstances, a sellers right to receive the agreed price can also be
protected by means of a payment guarantee.
Another mechanism available to exporters is forfaiting, a nonrecourse financing transaction. Forfaiting performs a useful
payment-securing function, but it is first and foremost a financing
technique and therefore does not fall within the scope of this
brochure. Nor shall we consider state-run schemes for insurance against trade risks (export risk guarantees).
1. Documentary Credits
A documentary credit is an undertaking made by a bank, either at the request of the applicant for the credit or on its
own behalf, to pay a specified amount in an agreed currency to a beneficiary, on condition that the beneficiary presents
stipulated documents within a prescribed time limit.
In most cases, the bank acts as an intermediary between the
buyer and the seller. However, subject to the applicable national
legislation, banks may also issue documentary credits on their
own account. Settlement of documentary credits is effected
through the bank by means of a direct exchange: the beneficiary
presents the required documents to the bank and receives in
return the amount specified in the credit (in the form of cash, an
accepted bill of exchange or an undertaking to pay, depending
on the terms of the credit). With a documentary credit, the
beneficiary is no longer dependent on the buyers ability or will-
ingness to pay. Moreover, he can obtain liquid funds shortly after

dispatching the goods.
Documentary credits go a long way toward reconciling the conflicting interests of the buyer and the seller:
The seller wants to be sure that the price of the goods will
be paid in the correct currency.
The buyer does not want to pay for the goods before they
have actually been dispatched.
2. Documentary Collections
In a documentary collection, a bank collects payment for the seller by delivering documents to the buyer.
Here again, the bank acts as an intermediary between the buyer
and the seller. In this case, however, the seller does not receive
payment until the monies have been paid to the remitting bank.
He therefore has to wait longer for his money than if he were
being paid under a documentary credit. Moreover, his risk is not
fully covered. When he sends off the goods, he still has no

assurance that the buyer or the buyers bank will pay; he simply
has to trust in their ability and willingness to do so. Documentary
collections are therefore normally used only when the buyer and
seller are already familiar with each other.
Documentary Credits and Documentary Collections both Have Their Specific Advantages (Fig. 5)
Documentary Credit
Can

be used as a means of securing payment in transactions with virtually every country in the world.
Rapid access to funds for the seller.
Flexible terms of payment with no impairment of security.
Suitable as an instrument for short-term financing.
Rapid and convenient settlement, often enabling the seller
to offer attractive discounts.
High degree of legal security throughout the world.
Substantially better security than settlement on open
account.
Usually faster than settlement on open account (because
the documents are presented through a bank).
Where documents are to be released against acceptance
of the bill of exchange in Switzerland, the seller can request
an official confirmation in the event of non-payment (protest). This speeds up recovery of the debt and simplifies the
collection of interest on arrears.
Few formal requirements, hence great flexibility for both
buyers and sellers.
Low cost.
3. Payment Guarantees
A payment guarantee serves to protect claims arising from a
loan or from some other financial liability. If a buyer unexpectedly
fails to make payment when the exporter has met his contractual obligations (i.e. has delivered the goods or performed the
service as agreed), a written declaration to this effect is sent to
10
the guarantor bank, which will then be obliged to pay. This is

quite distinct from the more usual function of a bank guarantee,
which is to ensure that the seller carries out his side of the contract. Please also refer to the brochure on bank guarantees.
E. Bank Guarantees as Protection against Non-Performance

Bank guarantees are easily the most important instruments for
protecting buyers against non-performance of international contracts. The usual form of guarantee is complementary to, but
legally independent of, the underlying commercial contract. The
bank undertakes to pay the buyer a definite sum of money if the
seller fails to meet his contractual obligations. Guarantees of
this type have become a very important feature of international

tendering. Foreign buyers now demand guarantees against
many kinds of risk, especially in the case of major projects. The
most commonly sought types of guarantee are tender bonds,
performance bonds and advance payment guarantees. Please
also refer to the brochure on bank guarantees.
F. Disputes Related to ICC Instruments

If the parties disagree about the interpretation of the definitions
or of the guidelines set down by the International Chamber of
Commerce with respect to documentary credits (UCP), documentary collections (URC) and demand guarantees (URDG),
there are a number of different ways of settling the dispute. The
simplest and undoubtedly cheapest method consists of constructive negotiation with the counterparty to find an acceptable
solution.
If this is not successful, an appeal is made to a judge. This can
take place in a court of arbitration or in any other court. Such
cases usually take a long time. They require consultation and
the use of lawyers, which leads to high costs that often exceed
the value of the matter under litigation.
The International Chamber of Commerce has set up an instrument and rules to solve disputes in a relatively amicable manner
in a similar way to in a court of arbitration. These rules the ICC
Rules for Documentary Instruments Dispute Resolution Expertise (ICC DOCDEX RULES) exist solely in English.
The initiator can apply to the International Chamber of Commerce for a DOCDEX decision. The counterparty receives a
copy of the application and can, but does not have to, state its
position in reply. Three people are selected from a list of experts
in the International Chamber of Commerces Banking Commission to judge the case. The experts must declare their impartiality. The whole process should normally not take more than
90 days from the arrival of the application at the International
Chamber of Commerce to the issue of a DOCDEX decision
reached collectively by the experts. The costs amount to USD
5,00010,000. If the case is unusually demanding, additional
costs may be incurred. Over 270 cases have already been settled in this way since 1997.
11
12
2. Instruments for Securing Payment

A.
Documentary Credits
15
1.
Procedures and Participants
15
2.
Basis in Law
18
3.
The Documentary Credit Agreement
3.1 Basic Forms of Documentary Credit

a) Unconfirmed Irrevocable Credit

b) Confirmed Irrevocable Credit
3.2 Types of Credit and Special Arrangements

a) Overview

b) Types of Documentary Credit
Sight Credit
Deferred Payment Credit
Acceptance Credit
Negotiation Credit
Red Clause Credit
Revolving Credit
Standby Credit
Transferable Credit

c) Special Arrangements
Back-to-Back Credit
Assignment of the Proceeds of a Documentary Credit
18
19
19
19
20
20
20
20
23
23
23
24
24
24
25
35
35
35
4.
4.1
4.2
4.3
Issue of the Credit

Documentary Credit Application
Notification of the Issue of the Credit
Advice or Confirmation to the Beneficiary
39
42
47
47
5.
5.1

5.2

5.3
5.4
Utilization of the Credit

Basic principles
a) Compliance with Documentary Requirements
b) Compliance with Time Limits
Documents
a) Overview
b) Documents of Title
c) Documents of Evidence and Accompanying Documents
Discrepancies in the Documents
Settlement
52
52
52
52
53
53
53
60
75
75
6.
Supplement to UCP 600 for Electronic Presentation
76
7.
Costs
77
13

A. Documentary Credits
1. Procedures and Participants
Documentary credits are probably still the most versatile and
effective means of securing payment in international trade.
When doing business with countries where foreign trade is
under state control, it is often impossible to carry out import and
export transactions without the use of documentary credits.
As well as providing security of payment, documentary credits
can also serve as a means of raising finance. A seller who has
a payment undertaking from the buyers bank is in a better position to request a loan from his own bank, e.g. to cover the cost
of producing the goods. The importers bank, too, may be pre-
pared to grant a loan on the strength of a documentary credit if

the handling of the credit will put it in possession of documents
of title to the goods. As a bill of lading or warehouse keepers
warrant incorporates an entitlement to specific goods, possession of the document gives the bank ownership of the goods
themselves.
Although documentary credits are now increasingly being used
in connection with service transactions (including turnkey
projects), here we are concerned primarily with their traditional
function as a means of securing payment for goods.
Stages in a Documentary Credit Transaction (Fig. 6)

Stage 1
Offer
The exporter makes an offer to a prospective buyer.
Documentary Credit Agreement

In contract negotiations, the exporter and the buyer agree on
the terms and conditions of the documentary credit.
Stage 2
Order
The importer places an order with the exporter or signs a
contract of sale.
Issuing the Documentary Credit

The importer instructs his bank to issue the documentary
credit.
Stage 3
Delivery
The exporter delivers the goods.
Utilizing the Documentary Credit

The exporter obtains payment from the bank by presenting the
documents stipulated in the agreement.
15
Parties to the Documentary Credit (Fig. 7)

A straightforward documentary credit transaction involves three
parties:
the applicant (buyer, importer)
the issuing bank (issuing bank, buyers/importers bank)
the beneficiary (seller, exporter)
The issuing bank is usually located in the importers country,

which could well be thousands of miles away from the country
of the exporter. This makes it very difficult for the exporter to
gauge the creditworthiness of the issuing bank. The transfer of
information and documents takes time and involves risks, which
is why a correspondent bank located in the same country or
even in the same town as the beneficiary is usually brought in as
a fourth party to the transaction. This bank can reliably assess
the status of the issuing bank and also has rapid and dependable means of communication with it.
a)
b)
Importer, buyer
Applicant
Importer, buyer
Applicant
Issuing bank
Issuing bank
Correspondent bank
Exporter, seller
Beneficiary
16
Exporter, seller
Beneficiary
If the importer already has a banking relationship in the exporters country, he can apply directly to that bank for the issue of a
documentary credit. This procedure is available, for example, to
Swiss companies located abroad and provides them with a more
direct and economical way of paying for goods delivered from
Switzerland.
c)
Importer, buyer
Applicant
Issuing bank
Exporter, seller
Beneficiary
17
2. Basis in Law
Documentary credits are not expressly mentioned in either the
Swiss Code of Obligations or other Swiss legislation. Legal
judgments in relation to documentary credits were formerly
based exclusively on the relevant articles of the Swiss Code of
Obligations, i.e. Articles 394 et seq. (Mandate) and Articles
466 et seq. (Order).
In a judgment made in 1952 (BGE 78 II 42 et seq. [1952]), the
Swiss Federal Supreme Court ruled for the first time that the
legal relationships between the parties to a documentary credit
are also governed by the Uniform Customs and Practice for
Documentary Credits (UCP). The UCP are a set of internationally recognized definitions and rules for documentary credit
operations. They are issued by the International Chamber of
Commerce in Paris and are updated from time to time. The
latest revision (UCP 600), in force since 2007, is reproduced in
the Appendix.
In 2002, a supplement for electronic presentation, known
as the eUCP was added to the UCP 500. This supplement was
also revised in 2007 in line with the new UCP 600. As the title
of the supplement suggests, it sets down definitions and rules

of conduct related to the presentation of electronic documents.
These rules are also included in the Appendix.
Today, all legally binding documents used by internationally
active banks in connection with documentary credit transactions
state that the credit is subject to the UCP. The UCP thus form
an integral part of the contractual agreements between the parties to the credit.
All Credit Suisse application forms for documentary credits or
corresponding electronic instructions carry the following text:
This documentary credit is to be subject to the Uniform Customs and
Practice for Documentary Credits published by the International Chamber
of Commerce in force at the time of the issuance.
However, the parties to a documentary credit are also entitled to

make agreements that deviate from the UCP in specific points
(UCP, Art 1).
3. The Documentary Credit Agreement

An export company has been asked by a prospective foreign buyer to submit an offer for the supply of goods or
services.
When submitting the offer or signing the contract of sale, the
seller must already have a clear idea of the risks and requirements involved, i.e. in relation to
the credit standing and trustworthiness of the buyer
the political, economic and legal situation in the buyers
country
his own liquidity
If a documentary collection is out of the question, the seller will
select one of two basic forms of documentary credit,
depending on the level of security needed:
unconfirmed irrevocable credit
confirmed irrevocable credit
18
In order to avoid hitches in the documentary credit transaction,

the seller should also have precise ideas regarding the following
points:
type of credit or special arrangement (see summary on page
38, Fig. 16)
period of validity
mode of transport and route
insurance cover
delivery terms (FOB, CFR, CIF, etc.), etc.
These points will also affect the exporters price calculation, as
will the cost of any bankers guarantees issued in favor of the
buyer.
As mentioned above, the terms and conditions of the documentary credit should be set out in the agreement as the seller can
still influence the contents of the documentary credit at this
stage. The documentary credit clause in the contract of sale not
only obliges the buyer to issue a documentary credit in favor of
the seller but also obliges the seller to accept payment through
the documentary credit provided.
b) Confirmed Irrevocable Credit

By adding its confirmation to the credit, the correspondent bank
undertakes to honour documents which conform to the terms of
the credit and are presented within the prescribed time limit
(UCP, Art. 2 definition of Confirmation and Art. 8). In this case,
the beneficiary receives not only an undertaking by the issuing
bank but also an independent promise of payment on the
part of the correspondent bank.
3.1 Basic Forms of Documentary Credit
This significantly improves the beneficiarys security. Confirmation by the correspondent bank eliminates the political and
transfer risks provided the beneficiary is domiciled in the same
country as the confirming bank.
Credit Documentary credits come in various basic forms. These

differ according to the degree of security provided and the
point in time at which the bank assumes the risk.
In the case of an irrevocable, unconfirmed letter of credit, the
consent of the beneficiary is required for any changes to, or
cancellation of the credit. In the case of an irrevocable, confirmed letter of credit, the consent of the confiming bank is also
required.
a) Unconfirmed Irrevocable Credit
In the case of an unconfirmed irrevocable credit, the correspondent bank merely advises the beneficiary that a documentary credit has been issued. It does not itself give any
undertaking to pay and is under no obligation to honour documents presented by the beneficiary.
The beneficiary therefore has to rely solely on the foreign bank
which issued the credit. This means that an unconfirmed irrevocable credit is appropriate only if the political and transfer risks
are low. However, provided the correspondent bank has good
relations with the issuing bank and the political and economic
situation in the foreign country is stable, the correspondent bank
will generally honour the documents in order to enable the client
to conclude the transaction promptly.
Moreover, in case of dispute, the competent courts of the confirming banks country have exclusive jurisdiction, and the laws
of that country apply. Disputes relating to unconfirmed credits
are dealt with by the courts of the issuing banks country.
From the exporters point of view, obtaining the jurisdiction of a court in his
own country can be very important. An example will illustrate this. A court in
a developing country, disregarding the Uniform Customs and Practice for
Documentary Credits, ruled that the applicant for the credit had the right to
reject irregular documents several months after receiving them, if at the time
of their receipt no adequately qualified staff were available to examine
them.
A correspondent bank can have good reasons for refusing a

request to confirm a documentary credit. Before signing the
contract, export companies are well advised to find out from
their bank whether and on what conditions it will be prepared to
confirm a credit from the country and bank in question. In this
way it is possible to avoid situations that could be unpleasant for
all concerned.
The most secure arrangement for an exporter is an irrevocable credit confirmed by his own bank. Any uncovered
exchange risk can then be hedged by means of forward
exchange contracts, provided the date (or period) of payment is
known in advance. Even where the time of payment cannot be
predicted with certainty, banks operating in the foreign exchange
markets can usually offer useful arrangements.
19

a) Overview
As already mentioned, the basic forms of documentary credit
differ in respect of the degree of security they provide for the
beneficiary. Credits are further classified into various types
according to the method of settlement employed (see Fig. 16,
page 38, table Types of Credit and Special Arrangements).
Depending on how the credit is payable (method of settlement),
one of the following types of credit or special arrangement will
be applicable.
aa) Sight Credit
The most commonly used credits are sight credits. These provide for payment to be made to the beneficiary immediately
after presentation of the stipulated documents, on condi-
20
tion that the terms and conditions of the credit have been complied with. The banks are allowed reasonable time to examine
the documents up to a maximum of five banking days following
the day of receipt of the documents (UCP, Art. 14b).
The value date for crediting the amount to the exporters account
(i.e. the date on which the calculation of credit interest begins or
debit interest ends) will depend on the currency in which the
credit was issued. The proceeds of a Swiss-franc credit can
normally be paid at once. If the credit is expressed in the currency of the importing country or that of some other country,
payment generally takes somewhat longer. If the invoice amount
is not in the currency of either the exporters or the importers
country, the issuing bank could authorize the bank in the currency area concerned to credit or transfer the amount on demand
to the correspondent bank (reimbursement).
(See Fig. 8 on the facing page, Procedure for a Sight Credit)

a) Overview
As already mentioned, the basic forms of documentary credit
differ in respect of the degree of security they provide for the
beneficiary. Credits are further classified into various types
according to the method of settlement employed (see Fig. 16,
page 38, table Types of Credit and Special Arrangements).
Depending on how the credit is payable (method of settlement),
one of the following types of credit or special arrangement will
be applicable.
aa) Sight Credit
The most commonly used credits are sight credits. These provide for payment to be made to the beneficiary immediately
after presentation of the stipulated documents, on condi-
tion that the terms and conditions of the credit have been complied with. The banks are allowed reasonable time to examine
the documents up to a maximum of five banking days following
the day of receipt of the documents (UCP, Art. 14b).
The value date for crediting the amount to the exporters account
(i.e. the date on which the calculation of credit interest begins or
debit interest ends) will depend on the currency in which the
credit was issued. The proceeds of a Swiss-franc credit can
normally be paid at once. If the credit is expressed in the currency of the importing country or that of some other country,
payment generally takes somewhat longer. If the invoice amount
is not in the currency of either the exporters or the importers
country, the issuing bank could authorize the bank in the currency area concerned to credit or transfer the amount on demand
to the correspondent bank (reimbursement).
(See Fig. 8 on the facing page, Procedure for a Sight Credit)
Procedure for a Sight Credit (Fig. 8)
Establishment of the credit terms
Opening of the credit
Utilization of the credit

Goods
Documents
Importer
Buyer, applicant
Application
Payment
Documents
Issuing bank
Contract
Notification of issue
Documents
Payment
Correspondent bank
Advice/confirmation
Exporter
Seller, beneficiary
20
Goods
Payment
bb) Deferred Payment Credit

Under a deferred payment credit, the beneficiary does not
receive payment when he presents the documents but at a
later date specified in the credit. On presenting the required
documents, he receives the authorized banks written undertaking to make payment at maturity. In this way the importer
gains possession of the documents (and thereby of the goods
or services) before being debited for the amount involved.
In terms of its economic effect, a deferred payment credit is
equivalent to an acceptance credit, except that there is no bill of
exchange, only the creation of a receivable, and therefore no
possibility of obtaining money immediately through a discount
transaction. Prior to UCP 600, courts in a variety of countries
judged that a claim under a deferred payment credit could only
be settled on the day of maturity. If a bank pays its debt (by way
of an advance) it then carries all the risks in the event of objections due to possible fraud, etc., which repeatedly resulted in the
bank acting in good faith but ultimately bearing the loss. Because
in practice most claims under deferred payment credits were
settled in advance and some countries legislation permitted
this, UCP 600 contains a new provision stating that a designated, obligated bank is authorized to pay obligations it has
assumed in advance (Art. 12b UCP). At the same time, the
issuing or confirming bank must reimburse the designated bank
on the day of maturity regardless of whether the designated
bank paid the amount prior to maturity or not (Art. 7c, 8c UCP).
cc) Acceptance Credit
With an acceptance credit, payment is made in the form of a
term bill of exchange drawn on the issuing bank or a nominated
bank. Once he has fulfilled the credit requirements, the beneficiary can demand that the bill of exchange be accepted and
returned to him. Thus the accepted bill takes the place of a
cash payment.
The beneficiary can present the accepted bill to his own bank for
payment at maturity or for discounting, depending on whether or
not he wants cash immediately. For simplicitys sake, the beneficiary usually gives an instruction that the accepted bill should
be left in the safekeeping of one of the banks involved until it
matures. Bills of exchange drawn under an acceptance credit

usually have a term of 60180 days.
In a similar manner to a deferred payment credit, the UCP also
states that under the terms of an acceptance credit the issuing
or confirming bank must reimburse on expiry the designated
bank that has accepted a bill of exchange regardless of whether
it has purchased (discounted) the acceptance or not (Art. 12b,
7c, 8c UCP).
The purpose of an acceptance credit is to give the importer time
to make payment. If he sells the goods before payment falls
due, he can use the proceeds to meet the bill of exchange. In
this way, he does not have to borrow money to finance the
transaction.
dd) Negotiation Credit
Negotiation means the advance provision of value (generally
with deduction of interest) by the bank authorized to negotiate
against the beneficiarys draft (bill of exchange) and/or documents. Depending on the type of credit, an obligation to give
advance value at any point in time up to maturity may replace
immediate payment.
The negotiating bank immediately gives the value of the documents minus interest to the beneficiary on condition that the
documents provided by the beneficiary are in order. The most
common form of negotiation credit permits negotiation by any
bank. In rare cases the choice is limited to specified banks.
Payment may be subject to receipt (of funds from the issuing or
confirming bank) or without reservation. In the case of unconfirmed credits, the negotiating bank can decide whether or not
to negotiate.
Mere examination of the documents without giving value does
not constitute negotiation (Art. 12c UCP).
The payment commission for a negotiation credit is generally
payable by the beneficiary. This is in contrast to the usual practice for other types of documentary credit.
23
ee) Red Clause Credit

In the case of a red clause credit, the seller can obtain an
advance for an agreed amount from the correspondent bank.
This advance is used to finance the manufacture or purchase of
the goods to be delivered under the documentary credit. On
receiving the advance, the beneficiary must provide a receipt
and a written undertaking to present the required documents
before the credit expires.
The advance is paid by the correspondent bank, but it is the
issuing bank that assumes liability. If the seller does not present
the required documents in time and fails to refund the advance,
the correspondent bank debits the issuing bank with the amount
of the advance plus interest. The issuing bank, in turn, has
recourse to the applicant, who therefore bears the risk for the
advance and the interest accrued.
The clause permitting the correspondent bank to make an
advance used to be written in red ink: hence the name red
clause credit.
ff) Revolving Credit
Revolving credits can be used when goods are to be delivered
to the seller in specified installments at specified intervals. The
amount available at any one time is equivalent to the value of
one partial delivery, e.g.:
Credit amount CHF 100,000, revolving eleven times up to a total amount
of CHF 1,200,000.
After utilization of the first CHF 100,000 the next portion

becomes available automatically, and so on up to the total of
CHF 1.2 million. The revolving clause often also specifies the
intervals at which the credit may be utilized.
A revolving credit can be cumulative or non-cumulative. Cumulative means that amounts from unused or incompletely used portions can be carried forward to a subsequent period. If a credit
is non-cumulative, portions not used in the prescribed period
cease to be available.
24
gg) Standby Credit

Standby credits are encountered principally in the USA. Under
the laws of most US states, banks are prohibited from issuing
regular guarantees, so standby credits are used instead. In
Europe, too, the use of this type of credit is increasing. By virtue
of their documentary character, standby credits are often governed by the UCP (Art. 1 UCP).
The types of payment and performance that can be guaranteed
by standby credits include the following:
payment of term bills of exchange
repayment of bank advances
payment of goods delivered
delivery of goods in accordance with contract
execution of construction contracts, supply-and-install contracts, etc.
In order to enforce payment by the bank, the beneficiary merely
presents a declaration stating that the applicant for the credit
has failed to meet his contractual obligations. This declaration
may have to be supported by other documents (e.g. copies of
shipping documents).
Banks often issue standby credits on their own behalf as a guarantee of their own performance in securities lending and borrowing transactions or as a guarantee to a supplier that he will
receive payment for goods delivered. In the latter case, the
buyer would probably not be aware that the supplier has obtained
such cover from the bank.
Some articles of the UCP have caused interpretation problems
with respect to standby credits. None of the articles relating to
transport documents and the designated presentation periods
from their date of issue make any sense. Questions have also
been raised about articles 17 and 44 of the UCP 500 (expiry
versus interruption of business due to strikes, etc.) relative to
this business. Attempts have therefore been made, particularly
in the U.S., to improve the situation. Lawyers in the U.S. have
developed new guidelines, originally intended for U.S. jurisdiction. As a result of various interventions the proposed guidelines
were finally submitted to the ICC and they were approved as
ISP98 in 1998 (see our brochure Bank Guarantees).
hh) Transferable Credit

Transferable credits are particularly well adapted to the requirements of international trade. A trader (middleman) who receives
payment from a buyer in the form of a transferable documentary
credit can use that credit to pay his own supplier. This enables him to carry out the transaction with only a limited outlay
of his own funds.
The buyer applies for an irrevocable credit issued in the traders
favor. The issuing bank must expressly designate the credit
as transferable (Art 38b UCP) and, in the case of a freely
negotiable credit, nominate the bank authorized to act as transferring bank (Art. 38b UCP).
As soon as the trader receives the confirmation (or advice) of
the credit, he can request the bank to transfer the credit to his
supplier (second beneficiary). The bank is under no obligation to
execute the transfer except to the extent and in the manner it
has expressly consented to do so (Art. 38a UCP). The costs of
the transfer are usually charged to the trader, and the transferring bank is entitled to debit them in advance (Art. 38c UCP).
Once the supplier has dispatched the goods, he presents the
documents to his advising or confirming bank and receives the
agreed payment. The documents are then sent to the transferring bank, which debits the trader. The latter delivers his own
commercial invoice (made out to the buyer) to the transferring
bank and receives the commercial invoice of his supplier in
exchange. The trader is then credited with the amount of his
own commercial invoice. The difference between this and the
amount shown on the suppliers commercial invoice represents
his profit.
The basic rule for transferable credits is that payment of the

original credit must be obtainable on the strength of the documents presented under the transferable credit. Thus the terms
and conditions of the transferable credit have to be identical with
those of the original credit. Possible exceptions to this rule are
as follows (Art. 38g UCP):
The amount of the credit and the unit prices may be reduced.
The expiry date may be brought forward.
The last date of presentation may be brought forward.
The period for shipment may be shortened, provided that the
original credit does not specify a particular shipping date.
The required percentage of insurance cover may be increased
in order to provide the amount of cover stipulated in the original credit or in Art. 28f ii UCP.
The trader may require additional documents; these remain
in his keeping.
Furthermore, the trader has the right to substitute his own
invoice for that of the supplier. The difference between the two
invoice amounts represents his profit (Art. 38h UCP). In this way
the final purchaser is prevented from discovering the traders
profit margin. However, the bank must be able to rely on the
traders punctuality with regard to the substitution of invoices. If
he fails to present the new commercial invoice on first demand,
the bank has the right to deliver the suppliers invoice to the
issuing bank. In some circumstances, the bank may in fact be
obliged to do so in order to comply with the terms of the original
credit. Such situations can be extremely unpleasant, so the
bank will often require the trader to present the commercial
invoice (possibly a blank invoice) at the same time as he gives
the instruction for transfer.
Finally, the traders commercial invoice, together with the other

documents, is forwarded to the issuing bank.
25
The expiry date of the original credit usually applies to the transferred credit as well. This means that the supplier to whom the
credit has been transferred can present the documents to the
bank which advised the transfer with or without confirmation
at any time up to the expiry date of the original credit. However, the supplier must present the documents to the transferring bank and not directly to the issuing bank of the original
credit (Art. 38k UCP).
As already mentioned, it must be possible to obtain payment of
the original credit and of the transferred credit on the strength
of the same documents. lf the trader wishes to prevent the
buyer and supplier from becoming known to each other, he must
insist that the supplier provide neutral documents that give no
indication of the suppliers identity. He must also be careful to
ensure that the original credit does not stipulate any documents
showing the name of the ultimate buyer.
A transferable credit may be transferred only once. The second
beneficiary may not transfer it again unless there is an express
provision to this effect in the original credit, e.g. transferable
twice. A retransfer by the second beneficiary to the first beneficiary does not constitute a second transfer, but rather the
cancellation of the transferred credit. Moreover, the first beneficiary can transfer fractions of the original credit to several suppliers, provided part-shipments are permitted. The aggregate of
these partial transfers constitutes one transfer (Art. 38d UCP).
These limits on transferability are intended to prevent abuse.
26
In the request for the transfer (and prior to its implementation),

the first beneficiary must instruct the transferring bank whether
and under what conditions the second beneficiary may be
advised of any amendments to the credit (Art. 38e UCP). This
decision has important implications for the second beneficiary.
The transferring bank must therefore advise the second beneficiary of the first beneficiarys instructions in this matter.
When a credit is transferred in fractions, each second beneficiary has the right to accept or to refuse an amendment without
prejudice to the rights of the other beneficiary(ies).
(See Fig. 9, Procedure for a Transferable Credit on page 28)
(See Fig. 10, Issuance of the Original Credit on page 31)
(See Fig. 11, Advice of the Basic Documentary Credit on
page 32)
(See Fig. 12, Transfer Request from Intermediary on page 33)
(See Fig. 13, Notification of the Transferred Credit to the Bank
of the Second Beneficiary on page 34)
Procedure for a Transferable Credit (Fig. 9)
Establishment of the credit terms
Opening of the credit
Utilization of the credit

Goods
Documents
Importer
Buyer, applicant
Application for
the original credit
Documents
Payment
CHF 100,000
Issuing bank
Contract
Substitution of invoices
Notification
of issue of the
original credit
Instruction to
transfer the credit
Documents
Payment
CHF 100,000
Transferring bank
Payment CHF 90,000
Confirmation
of the original credit
Invoice
CHF 90,000
Trader/middleman
Beneficiary of the original credit
Contract
Notification
of transfer
Documents
Payment
CHF 90,000
Correspondent bank
Exporter
Seller, beneficiary of the transferred
credit (second beneficiary)
28
Invoice CHF 100,000
Advice/
confirmation
of the transferred
credit
Goods
Payment
CHF 90,000
Payment
CHF 100,000
Issuance of the Original Credit (Fig. 10)
< MT700 - ISSUE OF A DOCUMENTARY CREDIT >

CREDITBANK MNCHEN
700
CREDIT SUISSE, ZURICH
Sequence of Total
1/1
:40A:
Form of Documentary Credit
IRREVOCABLE TRANSFERABLE
:20:
Documentary Credit Number
Z-26-400
:31C:
Date of Issue
01-MAR-08
:40E:
Applicable Rules
UCP LATEST VERSION
:31D:
Date and Place of Expiry
17-APR-08 SWITZERLAND
:50:
Applicant
KARL MLLER KG;

LINDENWEG 2; DE-81545 MNCHEN
:59:
Beneficiary
TRANSIT-HANDEL AG
FRACHTSTRASSE 15; CH-8000 ZRICH
:32B:
Currency Code, Amount
USD 100,000.--
:41A:
Available with By
CREDIT SUISSE ZURICH; BY PAYMENT
:43P:
Partial Shipments
ALLOWED
:43T:
Transshipment
ALLOWED
:44E:
Port of Loading/
Airport of Departure
ANY PORT IN USA
:44F:
Port of Discharge/
Airport of Destination
HAMBURG, GERMANY
:44C:
Latest Date of Shipment
27-MAR-08
:45A:
Description of Goods and/

or Services
100 MEASURING INSTRUMENTS ABX

AT A UNIT PRICE OF USD 1,000. CIF
:46A:
Documents Required
:71B:
Charges
ALL BANK CHARGES OUTSIDE ISSUING BANK ARE FOR

BENEFICIARY'S ACCOUNT.
:48:
Period for Presentation
DOCUMENTS MUST BE PRESENTED WITHIN 21 DAYS AFTER

SHIPMENT DATE AND WITHIN VALIDITY TERMS OF THIS
DOCUMENTARY CREDIT
:49:
Confirmation Instructions
WITHOUT
:78:
Instructions to Paying Bank
VALUE 3 (THREE) BANK WORKING DAYS AFTER OUR RECEIPT

OF YOUR SWIFT CONFIRMING THAT YOU HAVE TAKEN UP AND
DESPATCHED TO US CREDIT CONFORM DOCUMENTS WE
WILL COVER YOU AS PER YOUR INSTRUCTIONS.
:27:
1. SIGNED COMMERCIAL INVOICE, 4-FOLD

2. FULL SET (3/3) CLEAN ON BOARD OCEAN BILL OF LADING,
MADE OUT TO ORDER OF KARL MLLER KG, LINDENWEG 2,
DE-81545 MNCHEN, NOTIFY (SAME), MARKED 'FREIGHT
PREPAID'.
3. INSURANCE POLICY OR CERTIFICATE, COVERING 'ALL
RISKS', MADE OUT FOR 110 PCT OF TOTAL CIF INVOICE VALUE
31
Advice of the Basic Documentary Credit (Fig. 11)
CREDIT SUISSE
Trade Finance Service Center
P.O. Box 100
CH-8070 Zurich

Tel.
Telefax
Telex
SWIFT
+41 (0)44 333 11 11

+41 (0)44 332 29 40
812412 CS CH
CRESCHZZ80A
Registered letter

Hans Weber
Transit-Handel AG
Frachtstrasse 15
8000 Zrich
March 3, 2008
+41 44 334 62 35
SGAT 112-123456
Our reference:
Dear Sir/Madam
Reference number:
Z-26-400
Instructing party:

Karl Mller KG
Lindenweg 2
DE-81545 Munich
Amount:
USD 100,000
Creditbank
P.O. Box 4004
DE-81545 Munich
Issuing bank:

The bank named below has mandated us to advise you of the issuance of a transferable documentary
credit, of which you are the beneficiary. The text as well as the terms and conditions are enclosed
with this letter. Please note the terms and conditions that apply to this documentary credit. If you do not
accept one of the terms and conditions, please contact the applicant to request that it be amended.
Expiration date:
April 17, 2008 (in Switzerland)

Commissions and fees:
Our commissions and fees will be charged to you.
We are sending you this letter and the enclosed advice without any obligation on our part.
This documentary credit is subject to the Uniform Customs and Practice for Documentary Credits of
the International Chamber of Commerce in Paris, France, which were in force on the date it was issued.
The bank-to-bank reimbursement is subject to the Uniform Rules for Bank-to-Bank Reimbursements
under Documentary Credits of the International Chamber of Commerce in Paris, France, which were in
force on the date it was issued.
Yours sincerely
CREDIT SUISSE
32
Transfer Request from Intermediary (Fig. 12)
..
..
..
..
.
Transit-Handel AG
Frachtstrasse 15
8000 Zrich
Transit-Handel AG
March 5, 2008
Credit Suisse
Trade Finance SGAT 112
P.O. Box 100
CH-8070 Zurich
Documentary credit no. SGAT 112-123456 for USD 100,000 issued on behalf of Karl Mller KG, Munich
Dear Sir/Madam
We refer to your letter of March 3, 2008, advising us of the above documentary credit. We kindly request that
you transfer the documentary credit as follows:
USD 90,000
Expiration date:
April 17, 2008
Unit price:
USD 900
Beneficiary:
Technical Equipment Corp., P.O. Box 222, Atlanta, GA 30305, USA
Bank details:
Bank of Atlanta, P.O. Box 111, Atlanta, GA 30300, USA
Amount:
You can find details of the necessary documentation in the documentary credit. When requesting the insurance
policy, it is necessary to ensure that the value stipulated in the basic documentary credit is insured. All other
terms and conditions are unchanged.
We do NOT reserve the right to prohibit you from advising amendments to the second beneficiary.
Your commissions and fees will be charged to us.
We look forward to receiving your advice of execution.
Yours sincerely
TRANSIT-HANDEL AG
........................... .
33
Notification of the Transferred Credit to the Bank of the Second Beneficiary (Fig. 13)
< MT720 - TRANSFER OF A DOCUMENTARY CREDIT >

720
07 March 2008
BANK OF ATLANTA, ATLANTA
:27:
34
Sequence of Total
1/1
:40B:
IRREVOCABLE WITHOUT OUR CONFIRMATION
:20:
Transferring Bank's Reference
SGAT 112-123457
:21:
Z-26-400
:31C:
Date of Issue
01-MAR-08
:40E:
Applicable Rules
UCP LATEST VERSION
17-APR-08 SWITZERLAND
:52A:
Issuing Bank of the Original

Credit Documentary
CREDITBANK, MNCHEN, GERMANY
:50:
First Beneficiary
TRANSIT-HANDEL AG; FRACHTSTRASSE 15

8000 ZURICH, SWITZERLAND
:59:
Second Beneficiary
TECHNICAL EQUIPMENT CORP., PO BOX 222

ATLANTA, GA 30300, USA
:32B:
USD 90,000.-
:41A:
Available With... By...
CREDIT SUISSE ZURICH, BY PAYMENT
:43P:
Partial Shipment
ALLOWED
:43T:
Transshipment
ALLOWED
:44E:
Port of Loading/
ANY PORT IN USA
:44F:
Port of Discharge/
HAMBURG, GERMANY
:44C:
Latest date of Shipment
27-MAR-08
:45A:

or Services
100 ABX MEASURING INSTRUMENTS AT A UNIT PRICE OF

USD 900.--, CIF
:46A:
Documents Required
SIGNED COMMERCIAL INVOICE, 4-FOLD FULL SET (3/3) CLEAN
ON BOARD OCEAN BILL OF LADING, MADE OUT TO KARL MLLER KG, LINDENWEG 2,
DE-81545 MNCHEN, GERMANY, NOTIFY (SAME), MARKED 'FREIGHT PREPAID'. INSURANCE
POLICY OR CERTIFICATE COVERING ALL RISKS FOR USD 1,100.- PER PIECE.
:47A:
Additional Conditions
FIRST BENEFICIARY DOES NOT RETAIN THE RIGHT TO

REFUSE PASSING EVENTUAL AMENDMENTS UNDER THE
BASIC L/C TO THE SECOND BENEFICIARY (UCP 600, ART. 38).
:71B:
Details of Charges
ALL BANKING CHARGES AND COMMISSIONS OUTSIDE

SWITZERLAND ARE FOR THE ACCOUNT OF SECOND
BENEFICIARY
:48:
WITHIN 19 DAYS AFTER DATE OF ISSUANCE OF THE

TRANSPORT DOCUMENT(S) BUT WITHIN THE VALIDITY OF
THE CREDIT
:49:
Confirmation Instruction
WITHOUT
:78:
Instructions to the Paying/

Accepting/Negotiating Bank
ON RECEIPT OF DOCUMENTS IN CONFORMITY WITH THE

TERMS AND CONDITIONS OF THIS TRANSFER, WE WILL
COVER YOU AS PER YOUR INSTRUCTIONS, AFTER OUR ECEIPT
OF FREELY AVAILABLE COVER UNDER THE BASIC L/C.
:31D:
c) Special Arrangements
A trader might wish to pay a supplier by transferring a sum owed
to him under a documentary credit even though the credit itself
is not transferable or a transfer would contravene Article 38 of
the UCP.
This can be done under one of two special arrangements: These
arrangements will not necessarily provide the supplier with the
same degree of security as a transferred credit, and the banks
will only agree to them on certain conditions:
a back-to-back credit
assignment of the proceeds of a credit
aa) Back-to-Back Credit
The traders bank issues a second credit (back-to-back
credit) in favor of the supplier on the sole security of a previous
credit issued in the traders favor. The bank will only be prepared
to do this if the resultant additional risks can be covered. It will
therefore insist on being designated as paying agent for the
back-to-back credit. Otherwise it would run the risk of losing the
amount of the credit if the documents were to be lost or delayed
en route between the correspondent bank and itself.
The bank will also need to be sure that there will be a smooth
exchange of invoices, because the original credit in favor of the
trader cannot be settled on the strength of the suppliers invoice
from the back-to-back credit.
bb) Assignment of the Proceeds of a Documentary Credit

The beneficiary of a credit can assign the proceeds entirely or
in part to a supplier. According to Article 39 of the UCP, the fact
that a credit is not stated to be transferable does not affect the
beneficiarys right of assignment. The bank, acting an the beneficiarys instructions, sends the assignee a declaration in which
it undertakes to pay him under certain conditions a specified
sum out of funds that have become available under the documentary credit.
This facility is frequently used by manufacturing companies,
which assign a part of the proceeds of the credit to subcontractors as payment for materials, components, etc.
In contrast to a transferable credit, presentation of the documents is the responsibility of the beneficiary alone, i.e. he cannot
assign the right to draw under the credit. Therefore, assignment
offers only limited security. The assignee (supplier) does not
receive payment until after the credit has been honored and he
has no assurance that the beneficiary will present the required
documents on time. Assignment of the proceeds of a documentary credit therefore requires a relationship of trust between the
assignee and the beneficiary of the credit.
(See Fig. 14, Procedure for an Assignment of the Proceeds of
a Documentary Credit on page 36)
(See Fig. 15, Request to Issue a Declaration of Assignment
on page 37)
The UCP contain no specific rules on back-to-back credits.

Legally, the two credits are completely separate, even though
they relate to the same transaction.
35
Procedure for an Assignment of the Proceeds of a Documentary Credit (Fig. 14)
Importer
Buyer, applicant
Application
Issuing bank
Contract
Assignment instruction
Notification
of issue
Correspondent bank
Advice/
confirmation
Exporter
Seller, beneficiary
Contract
Subcontractor
Assignment
36
Request to Issue a Declaration of Assignment (Fig. 15)
..
..
..
..
.
Transit-Handel AG
Frachtstrasse 15
8000 Zrich
Transit-Handel AG
March 5, 2008
Credit Suisse
Trade Finance SGAT 112
P.O. Box 100
CH-8070 Zurich
Documentary credit no. SGAT 112-123456 for USD 100,000 issued on behalf of Karl Mller KG, Munich
Dear Sir/Madam
We refer to your letter of March 3, 2008, advising us of the above documentary credit. We kindly request that
you issue the following notification of assignment to Hauser GmbH, Waldstrasse 5, 4000 Basel:
Z-26-400
Creditbank Munich
April 17, 2008
At sight, not confirmed by us under our reference SGAT 112-123456
Documentary credit no.

Issued by:
Expiration date:
Payable:
Quote
Receipt of a notification of assignment
Transit-Handel AG has informed us that it has assigned a maximum of USD90,000 of the proceeds of the abovementioned documentary credit to you.
We presume that this assignment was executed in accordance with applicable law and that you are now the holder of the
above-mentioned claim in the amount specified.
Each payment executed by us in connection with the assigned claim is subject to our General Terms and Conditions in
respect of our payment obligation under the documentary credit, including the requirements that:
The documents under the documentary credit have been submitted by the beneficiary promptly and in compliance with the
terms and conditions of the credit, as well as in accordance with the Uniform Customs and Practice for Documentary
Credits (UCP) of the International Chamber of Commerce (ICC) and the related International Standard Banking Practice;
the funds assigned under the documentary credit on the date that payment is to be executed are made available without
restriction to the beneficiary; no other right of lien or third-party claims apply, and no confiscations, legal dispositions or
instructions, or other reasons exist that could prevent the relevant payment from being executed.
In the event of partial deliveries or partial usage, we will pay the proportion of the documentary credit amount that
corresponds to the amount used.
Please note that no formulation in this letter is to be interpreted as confirmation of a payment instruction.
We will not charge you any costs upon payment.
Unquote
Your commissions and fees will be charged to us.
We look forward to receiving your advice of execution.
TRANSIT-HANDEL AG
TRANSIT-HANDEL AG
............................
37
Types of Credit and Special Arrangements (Fig. 16)

Type of Credit
Method of Settlement
Sight credit
Immediate payment on presentation of the documents. The contract specifies payment

in cash.
Deferred payment credit
Payment at maturity. The contract specifies payment at a future date (without a bill of
exchange). After presentation of the documents, the amount due under the credit may
be obtained in the form of an advance (less current account interest/under certain
conditions).
Acceptance credit
Payment at maturity. The contract specifies payment at a future date (with a bill of
exchange). After presentation of the documents, the bill can be discounted in order to
obtain its countervalue (less a discount) immediately.
Negotiation credit
The beneficiary can obtain the value of the documents minus interest from the bank(s)
nominated as having authority to negotiate. In a freely negotiable credit, any bank is
regarded as a nominated bank.
Red clause credit
An advance is made available to the beneficiary.
Revolving credit
The beneficiary receives payment in fixed installments for goods dispatched in partshipments.
Standby credit
The credit functions as a guarantee.
Transferable credit
The credit is used to pay the beneficiarys suppliers.
Arrangement
Method of Settlement
Back-to-back credit
A trader arranges for his supplier to be paid by means of a credit issued by the traders
bank. This credit is secured by a non-transferable credit issued in the traders favor.
The possibilities have to be ascertained in each case.
Assignment of the proceeds of a credit The beneficiary assigns all or part of the proceeds of the credit to a supplier.
With most types of credit, the flow of goods and payments is basically the same as in a sight credit (Fig. 8, page 21). The position
is rather different, however, in the case of a transferable credit (Fig. 9, page 28).
38
4. Issue of the Credit

The importer decides to accept the exporters offer. He agrees that after placing the order or signing the contract of
sale he will apply for the issue of a documentary credit in favor of the seller.
By applying for the issue of a documentary credit, the importer
requests his bank to make a promise of payment to the supplier.
Obviously, the bank will only agree to this request if it can rely
on reimbursement by the applicant. As a rule, the goods in the
underlying transaction cannot be accepted as the sole security
for the credit, particularly if they are not the sort of commodity
that can be traded on an organized market. Such an arrangement would involve the bank in excessive risks outside its specialist field. The applicant must therefore have adequate funds
in his bank account or a credit line sufficient to cover the required
amount.
It is in the importers own interest to be very careful when
formulating the terms and conditions of the credit. If he is
inexperienced in this field, or if the credit has to include special
features, he should seek specialist advice from his bank. It is not
just a question of ensuring that the credit complies with the
terms of payment stipulated by the supplier; it is equally important that the buyers own requirements be taken into account.
Complete and precise terms and conditions in the credit are the
best assurance that the goods will be dispatched promptly, in
good condition and at the agreed price, or in the case of a
service transaction that the service will be rendered as
agreed.
The principle that credits are legally independent of the
transactions to which they relate makes it all the more
important to exercise great care when drawing up the credit
terms. Credits, by their nature, are separate transactions from
the sales or other contracts on which they may be based.

(Art. 4a UCP). This means that the bank must examine the
documents without reference to the commercial transaction for
which the credit has been arranged.
Banks deal in documents and not in goods (Art. 5 UCP).
Once the bank has issued a documentary credit, it is under
obligation to pay, provided the required documents are surrendered by the stipulated deadline. The applicant cannot prevent
a bank from honouring the documents on the grounds that the
beneficiary has not delivered goods or tendered services as contracted.
Examples from Swiss Federal Supreme Court rulings:
Neither the buyer nor the issuing bank should be obliged to make the
purchasing price available except against the presentation of documents
that evidence the presence of the goods and their compliance with the
contract and which also give the buyer control over the goods. Furthermore,
the banks have nothing whatsoever to do with the underlying transaction; all
parties deal only in documents and not in goods; payment and reimbursement must be made unconditionally once the correctly presented documents have been taken up; the banks assume no responsibility for the
quality or nature of the goods. (BGE 100 II 150 [1974])
Thus the plaintiff seeks to substitute examination of the goods for examination of the documents; this goes against the very nature of a documentary credit. (BGE 104 II 277 [1978])
39
Application for a Documentary Credit (Fig.17a)
print
TO CREDIT SUISSE Trade Finance Service Center:
Zurich
Geneva
Basel
reset
Lugano
We request you to issue on our behalf and for our account the following Irrevocable Documentary Credit as per the instructions given
below. This credit is to be subject to the "Uniform Customs and Practice for Documentary Credits" published by the International
Chamber of Commerce in force at the time of the issuance.
Name and Address of
Applicant
to appear in the credit
Contact Person
Our Reference
Correspondent Bank
40A: Form of documentary credit

31D: Date of expiry
31D: Place of expiry at
59:
Beneficiary
32B: Currency and Amount
39:
Credit Amount specification
41A: Available with

(Place of presentation of
documents)
41A: Available by
Ourselves
Other Party
(specify)
Elektro-Import AG
Voltastrasse 10
8000 Zurich
A. Berner
Phone no 044 987 65 43 E-Mail Address
AB
Mitsuro Bank
P.O. Box 1202
Osaka 532, Japan
Irrevocable
SWIFT CODE:
Irrevocable and transferable
Irrevocable Standby
30-04-2008
Credit Suisse
Correspondent Bank
(29 characters max.)
Any Bank
Any Bank in: (country or city)
Nipponexport
20 Hakarucho 2-Chome
Naniwa-Ko
Osaka 530, Japan
USD
Full Address
30000.00
Exact
Maximum credit amount
Tolerance of +
/-
About (+/- 10 %)
specify:
Credit Suisse
Correspondent Bank
Any Bank
Payment at sight
Negotiation (specify below)
At
days after
Deferred payment (specify below)

Acceptance (specify below)
Mixed payment (specify below)
Date of shipment
Date of invoice
Sight
(define):
4 lines max. 35 characters

42A: Drawee
days from
42C: Drafts at
43P: Partial shipments
Allowed
other (specify):
Not allowed
43T: Transhipment
Allowed
Not allowed
44A: Place of Taking in Charge/ Dispatch from.../ Place of Receipt

44E: Port of Loading/ Airport of
Departure
44F: Port of Discharge/ Airport of
Destination
44B: Place of Final Destination/ For
Transport. to../ Place of Delivery
44C: Latest Date of Shipment
In
lots allowed
Kobe
Hamburg
30-04-2008
Page 1 / 2
40
Application for a Documentary Credit (Fig. 17b)

44D: Shipment period
EXW (ex works)

FCA (Free Carrier)
FOB (Free on Board)
Trade terms and place
At
CFR (Cost and Freight)

CIP (Carriage and Insurance paid to)
CIF (Cost Insurance and Freight)
CPT (Carriage paid to)
Other
as per ICC-Incoterms 2000
120 Television Sets "Brilliant Colours 2000" at USD 250 each.

45A: Description of Goods and/or
Services
(only a brief description)
Tolerance in quantity of +
%/-
% is allowed
Original(s)
46A: Documents Required
Commercial Invoice
Packing List
Certificate of Origin issued and/or visaed by
Chamber of Commerce
Beneficiary
Evidencing goods of
Certificate of Origin Form A (GSP)
Evidencing goods of
Copies
origin
origin
Full set of
Multimodal transport document
(Other)
Full set of
Marine Bill of Lading
(Other)
Made out to order and blank endorsed
Made out to order of Elektro-Import AG
Notify
Expeditio AG, Frachtstrasse 100, 8000 Zurich
Marked
Freight collect
Freight prepaid
Issued by
Airwaybill (Original for shipper)
Forwarder's Certificate of Receipt (FCR)
International Road Waybill (CMR)
Duplicate Railwaybill
Courier Receipt
Issued by
consigned to:
Notify
Marked
Freight collect
Freight prepaid
Insurance cover taken care by the applicant
Insurance policy or certificate covering 110 ... % of goods value and the following risks
Covering Multimodal Transport

Covering Seafreight
Covering Airfreight
Covering Landfreight
all risks incl. war, strike riot, and civil commotion
Other documents:
47A: Additional Conditions
All commissions and charges for our account

All commissions and charges for Beneficiary's account
Your (Credit Suisse) charges for our account, foreign bank charges
for beneficiary's account
71B: Charges
48:
49:
Documents to be presented within

21 days
Other:
After the date of:
Transport document
Other:
Correspondent bank
To add their confirmation
Not to add their confirmation
Other Conditions / Remarks

72:
Sender to Receiver Information
Documents to be sent to Credit Suisse as follows:

By courier service in
1 lot
2 lots
By registered mail in
1 lot
2 lots
You are authorized to debit our account directly

Place and date: Zurich, 1. April 2008
Stamp and Signature of the Applicant

Page 2 / 2
41
4.1 Documentary Credit Application

In order to facilitate applications for documentary credits, Credit
Suisse provides its clients with a special application form (See
Fig. 17a an 17b, Application for a Documentary Credit on
pages 40 and 41).
There are a number of points which require special attention when making out an application for a documentary
credit:
print
reset
TO
Type
of credit?
CREDIT
SUISSE Trade Finance Service Center:
Zurich
Geneva
Basel
Lugano
The UCP state that every documentary credit subject to these
guidelines
is irrevocable (Art. 2 definition of Documentary
credit).
Naturally,
theincontracting
parties
(applicant and benefiChamber
of Commerce
force at the time
of the issuance.
ciary) may conclude a revocable credit if they
so wish.AGHowever,
Elektro-Import
Name and Address of
Ourselves
Voltastrasse
10
the parties involvedApplicant
and the issuing
bank
must
Other Party 8000 Zurichdescribe preto appear
the credit and
(specify)
cisely under
what inconditions
at what point in time a revocareset
print
A. Bernerand effective.
Contact Person
tion would be possible,
permissible
TO CREDIT SUISSE Trade FinanceAB
Service Center:
Our Reference
Zurich
Geneva
Basel
Lugano
and for our account the following Irrevocable Documentary Credit as per the instructions given
We request you to issue on our behalf
Mitsuro Bank
below. This credit is to be subject toP.O.
theBox
"Uniform
Credits" published by the International
SWIFT CODE:
1202 Customs and Practice for Documentary
Correspondent Bank
Chamber
of Commerce in force at the
time
of Japan
the issuance.
Osaka
532,
Name and Address of
Applicant
40A: Form of documentary
credit
31D: Date of expiry
Contact Person
Ourselves
Other
Party
Irrevocable
(specify)
Elektro-Import AG
Voltastrasse 10
Irrevocable
and transferable
8000
Zurich
30-04-2008
A. Berner
Irrevocable Standby
Correspondent Bank
Method of Transmission
AB Credit Suisse
Our Reference
Any Bank
Although
today instructions to issue
a
documentary
Any Bank in: (country or city) credit are
Mitsuro Bank
generallyCorrespondent
transmitted
via
SWIFT,
it 1202
is still possible to apply SWIFT
by CODE:
P.O. Box
Bank
Nipponexport
Full Address
Osaka
532, Japan
telex or surface mail. The bank
cannot
be
held
responsible
for
Naniwa-Ko
59: inBeneficiary
delays
transmission unless such
delays have occurred through
Osaka 530, Japan
40A: Form
documentary
Irrevocable
Irrevocable
and transferable
Irrevocable Standby
the fault
of ofthe
bank.credit
Similarly, the
bank bears
no responsibility
for consequences
arising out30-04-2008
of the interruption of its business
31D: Date of expiry
print
USD
30000.00
by force majeure (Art. 36 and 37
UCP).
Credit
Suisse
Correspondent Bank
reset

Zurich
Geneva
Basel
Lugano
Any Bank
Exact
Any Bank credit
in: (country
or city)
39:
Credit
Amount
specification
Maximum
amount
About
(+/10
%) Credit as per the instructions given
request you to Bank
issue on our behalf and for our account the following Irrevocable Documentary
We
Beneficiarys
Tolerance
+
/% for Documentary
specify: Credits" published by the International
below. This credit is to be subject to the
"UniformofCustoms
and Practice
Nipponexport
Specification
of the beneficiarys
bank
not compulsory. If Full
theAddress
Chamber of Commerce
in force at the time
of theisissuance.
20 Hakarucho
2-Chome
Suisse
Correspondent
Bank
41A: Available
withnot designate aCredit
applicant
does
correspondent
bank,
the
bank
Naniwa-Ko
59: Beneficiary
Elektro-Import
AG
(29
characters max.)
(Place
of presentation
of
Any
Bank
Name
and Address
of
Ourselves
Osaka
Japan Voltastrasse
advises documents)
the beneficiary
directly
or530,
through
a correspondent
of
10
Applicant
or city)
Any Bank
Other
Partyin: (country
8000 Zurich
CSs choice
but does
not assume
responsibility
for
that
banks
to appear
in the credit
(specify)
Payment 30000.00
at sight
32B: Currency
and Amount
USD
conduct
(Art. 37
UCP).
A. Berner
044 987
65 43 (specify
Contact
Person
Phone noMixed
E-Mail below)
Address
payment
AB At
41A: Available by Our Reference
Date of shipment
Date of invoice
Sight
Exact days after
(define):
39: Credit Amount specification
About (+/- 10 %)
Mitsuro Bank
/%
specify:
SWIFT
CODE:
P.O.Tolerance
Box 1202of +
Correspondent Bank
41A: Available with

42A: Drawee
documents)
31D:
expiry
42C: Date
Draftsofat
41A: Partial
Available
by
43P:
shipments
43T: Transhipment
42A:
Drawee
59: Beneficiary
Departure
Destination
42C: Transport.
Drafts atto../ Place of Delivery
39:
Credit Amount specification
43T: Transhipment
42

41A: Available with
Departure
44F: documents)
Port of Discharge/ Airport of
Destination
41A: Available by
Osaka 532, Japan

4 lines
max.Suisse
35 characters
Credit
Correspondent Bank
Any Bank
or city) and transferable
Any Bank in: (country
Irrevocable
Irrevocable
Irrevocable Standby
30-04-2008
Payment
at sight
days from

Credit
Suisse
Correspondent
Bank
Allowed
Not
allowed
In
lots
allowed
At
days after
Date of shipment
Date of invoice
Sight
Any
otherBank
(specify):(29 characters max.)
(define):
Any
Bank in: (country
city)
Allowed
Not orallowed
Nipponexport
4 lines
max. 352-Chome
characters
20
Hakarucho
Kobe
Naniwa-Ko
Osaka 530, Japan
Hamburg
Full Address
days from
USD
30-04-2008
Allowed
30000.00
Not allowed
other (specify):
Exact
Maximum
Allowed credit amount
Not allowed
Tolerance of +
/%
In
lots allowed
About (+/- 10 %)
specify:
Page 1 / 2
Credit Suisse
Kobe
Correspondent Bank
Any Bank
Hamburg
Payment at sight
30-04-2008
At
days after

Date of shipment
Date of invoice
Sight
Page 1 / 2
(define):
Our Reference
AB
Correspondent Bank
Mitsuro Bank
P.O. Box 1202
Osaka 532, Japan
Irrevocable
SWIFT CODE:

Irrevocable Standby
Beneficiary
30-04-2008
31D: Date of expiry
The name and address of the beneficiary
be stated preCredit Suisse must Correspondent
Bank
Any Bank
cisely.
59:
Nipponexport
Naniwa-Ko
Osaka 530, Japan
Beneficiary
USD
Full Address
30000.00
Currency and Amount

Exact
A transaction
in specification
a foreign currency
involves
39: Credit Amount
Maximum credit
amountan exchange
About (+/- 10 %)
Tolerance
+
/%
specify:
risk for the buyer and seller, even
if theof transaction
is secured
with41A:
a confirmed
documentary Credit
credit.
There are basically
two Bank
Suisse
Correspondent
Available with
of presentation
of
Any Bank
ways of (Place
hedging
against
this risk:
documents)
or city)
Bank in: (country
The beneficiary can make Any
a forward
sale of
the expected
reset
print
foreign
currency
amount.
Payment
at
sight
Deferred payment
below)
Zurich
Geneva
Basel (specify
Lugano
Negotiation (specify
Mixed
payment (specify below)
The applicant can buy the required
foreignbelow)
currency
either
41A: Available by
daysaccount
after the following
Date
of shipment
Date of invoice
Sight
We
request you to issue on our behalf At
and for our
Irrevocable
immediately
or for delivery at the time when he expects
the Documentary Credit as per the instructions given
(define):
below. This credit is to be subject to the "Uniform Customs and Practice
for Documentary Credits" published by the International
beneficiary
to availinhimself
oftime
theofcredit.
Chamber of Commerce
force at the
the issuance.
Name and Address of
Elektro-Import AG
4 lines
max. 35 characters
Ourselves
Voltastrasse
Banks
foreign exchange
market
can 10
usually offer
42A: active
Drawee in the Applicant
Other Party
8000 Zurich
to appear arrangement
in the credit
(specify)
an advantageous
even
if the date of payment is not
A. Berner
Contact Person
Phone no 044 987 65 43
known in advance.
42C: Drafts at
Our Reference
days from
AB
Allowed
Not allowed
In
E-Mail Address
lots allowed
Partial shipments
The 43P:
applicant
may specify an exact
total
amount, a maximum
otherBank
(specify):
Mitsuro
P.O.
Box
1202
amount
or an approximate
amount
that
permits
variation SWIFT
by CODE:
Correspondent
Bank
43T: Transhipment
Allowed
Not allowed
Osaka 532, Japan
44A: Place
of Taking in Charge/
Disa given
percentage
in either
direction. Under Art. 30a UCP,
patch from.../ Place of Receipt
words
about
or approximately
mean that the amount
44E:such
Port ofas
Loading/
Airport of
Kobe
40A: Departure
Form of documentary credit
Irrevocable
Irrevocable Standby
drawn
may
be
up
to
10%
more
or
less
than
the stated figure.
Hamburg
30-04-2008
Destination
31D:
of expiry
Even44B:
if aDate
word
such as about is not used, a specific tolerance
Place of Final Destination/ For
Suisseunder certain
Correspondent
Bank
Transport.
Place of Delivery
expressed
as to../
a percentage
is Credit
allowed
circum(29 characters max.)
Any Bank
44C:
of Shipment
31D: Latest
Place of
expiry
at
stances.
TheDate
UCP
defines two30-04-2008
situations
in
which
a
tolerance
of
Page 1 / 2
5% less is allowed (Art. 30b and 30c UCP). The applicant may,
print
Nipponexport
Full Address
however, stipulate a different 20
margin
or2-Chome
tolerance as prescribed
Hakarucho
TO CREDIT SUISSE Trade Finance Service
Center:
Zurich
Geneva
Basel
Lugano
Naniwa-Ko
59: contract.
Beneficiary
in the
reset
Osaka 530, Japan
Chamber
of Commerce in force at the
time of the issuance.
USD
30000.00
Elektro-Import AG
Name and Address of
Ourselves
Exact
Voltastrasse 10
Applicant
Other
Partycredit8000
Zurich
Maximum
amount
About (+/- 10 %)
Validitytoofappear
the inCredit;
Expiry(specify)
Date
the credit
Tolerance of +
/%
specify:
Every documentary
carry an expiry date.
This
the
A. Berner
044is
987
65 43 E-Mail Address
Contactcredit,
Person must
Phone no
Credit
Suisse
Correspondent
Bank
41A:
Available
latest
date
forwith
the
presentation
of
documents,
i.e.
the
latest
date
AB
Our Reference
Any Bank
on whichdocuments)
the beneficiary can avail
himself of the credit. If the
Any Bank
Bank in: (country or city)
Mitsuro
SWIFT CODE:
expiry date
falls
on
a
non-bank
business
day, the documents
P.O. Box 1202
Correspondent Bank
Payment
at sight
Osaka
532,
Japan
may be presented on the following
bank
business
day
(Art.
29a
41A: Available by
UCP).
At
days after
Date of shipment
Date of invoice
Sight
(define):
Irrevocable
Irrevocable and
transferable
Irrevocable Standby
31D: Date of expiry
30-04-2008
4 lines
max.Suisse
35 characters
Credit
42A: Drawee
31D:
Place of expiry at
42C: Drafts at
59: Beneficiary
43T: Transhipment
44A: Place of Taking in Charge/ Dis32B: Currency and Amount
Departure
44F: Credit
Port ofAmount
Discharge/
Airport of
39:
specification
Destination
41A: Latest
Available
withof Shipment
44C:
Date
documents)
41A: Available by
Correspondent Bank

Any Bank
Nipponexport
days from
Allowed
Not allowed
Naniwa-Ko
Osaka
530,
Japan
other
(specify):
Allowed
USD
Full Address
In
lots allowed
Not allowed
30000.00
Kobe
Exact

Hamburg
Tolerance of +
/-
About (+/- 10 %)
specify:
Credit Suisse
Correspondent Bank
Any Bank
30-04-2008
Payment at sight
At
days after
Page 1 / 2

Date of shipment
Date of invoice
Sight
(define):
43
Documents
The applicant should not ask the exporter to produce any documents that will be difficult to obtain. He can safeguard himself
to a large extent against the delivery of inferior goods by stipulating a certificate of analysis, certificate of quality or some
similar document.
The applicant must precisely stipulate the documents that have
to be presented under the credit. The UCP contains basic provisions for the following documents: commercial invoice (Art. 18),
transport documents (Art. 1925) and the insurance document
(Art. 28). In the case of documents that are not covered in detail
by the UCP, the credit must specify the issuer of the documents
and prescribe a precise wording or information content. In the
absence of such stipulations, the banks will accept the documents as presented (Art. 14f UCP). The applicant should not
include conditions in the credit without stating the document to
be presented in evidence of compliance with such conditions. If
relevant documents are not precisely stipulated, the banks will
regard the conditions as not stated and will ignore them (Art.
14h UCP).
The following two examples illustrate the implications of this
provision.
simply be ignored. In order to make the condition effective, the

credit should stipulate a bill of lading evidencing the age of the
vessel or call for a separate document to that effect issued by
the master, the shipping company or their agents.
The regulations state that a documentary credit should not be
utilized via a bill of exchange drawn against the applicant as this
would call the irrevocable nature of the credit into question. The
issuing bank could interpret this as the bill of exchange not being
accepted by the applicant. An exhaustive list of utilization types
is contained in Art. 6 UCP. A bill of exchange drawn against the
applicant (financing instrument for the issuing bank) may, of
course, be requested, but must be listed as one of the documents to be submitted.
Insurance
The amount covered by the insurance document must be
at least 110% of the CIF value (Cost, Insurance, Freight)
(Art. 28f UCP). This extra 10% generally represents the
notional profit, i.e. the profit which the applicant hopes to
achieve by reselling the goods. The applicant may, of course,
specify a different amount in the application (pursuant to the
contract of sale).
Documents of Title to Goods

The applicant requests a quality certificate in the application Bills of lading and warehouse keepers warrants are usually
for a documentary credit without providing further details. The made out to order. They can then be transferred simply by
beneficiary
submits
endorsement. If they are made out to a named consignee,
44D: Shipment
period a document bearing this name that states
second-quality goods. Although this may be quite contrary to transfer of title has to be by assignment.
what is stated in the contract, the
document must be
accepted
EXW (ex works)
in this form
and
payment
must
be
made!
Notify Party
FCA
(Free Carrier)
CIF (Cost Insurance
and Freight)
FOB (Free on Board)
Other party is notified when the ship is about to arrive at
The notify
At
An applicant may state vessels age not to exceed 15 years. If the port of discharge, and also in the case of accidents at sea
this condition
appears in the credit without any indication of the or similar incidents.
documentServices
to be provided as evidence of the vessels age, it can
%/-
% is allowed
Original(s)
Commercial Invoice
Packing List
Chamber of Commerce
Beneficiary
Evidencing goods of
Evidencing goods of

Covering Seafreight
Covering Airfreight
Copies
origin
origin
Full set of
(Other)
Full set of
(Other)

Notify
Marked
Freight collect
Freight prepaid
Issued by
Airwaybill (Original for shipper)
Duplicate Railwaybill
Courier Receipt
Issued by
consigned to:
Notify
Marked
Freight collect
Freight prepaid
Other documents:
71B: Charges
44
48:
49:
All commissions and charges for our account

for beneficiary's account
21 days
Other:
After the date of:
Transport document
Other:
Correspondent bank
To add their confirmation
31D: Date of expiry
30-04-2008
Credit Suisse
Correspondent Bank
Any Bank
Nipponexport
Naniwa-Ko
Osaka 530, Japan
Full Address
Latest Shipping Date

The latest shipping date is a fixed date by which the goods have
to be
dispatched. The shipping date is determined in accord32B: Currency and Amount
USD
30000.00
ance with the rules laid down in the UCP for the various types
of transport documents. SpecialExact
attention must be paid to Inter39: Credit Amount specification
About (+/- 10 %)
pretations, Art. 3 UCP, which lists general expressions that are
Tolerance of +
/%
specify:
deemed to represent the date of shipment. If a latest shipping
Suisse
Correspondent Bank
Available with it should allowCredit
date41A:
is stated,
sufficient
time for the
docu(29 characters max.)
Any Bank
documents)
ments to
be presented before
the
credit
expires.
AllowAny Bank in: (country or city)
ance must also be made for postal delivery times between the
Payment at sight
place of dispatch, the office of Negotiation
the seller(specify
and below)
the office
ofpayment
the (specify below)
Mixed
41A: Available by bank, and also for
At possible
days after
of shipment
Date of invoice
Sight
correspondent
delays as aDate
result
of
(define):
official formalities. The interval between the latest shipping date
and the expiry date of the credit should not, however, exceed 21
4 lines max.
35 characters
days, unless otherwise authorized
in the
credit. If no interval is
42A: Drawee
specified
in the credit banks will refuse documents presented to
them later than 21 days after the shipment date (Art. 14c UCP).
42C: Drafts
days from
It should
beat
noted that the interval
applies only if an original
Allowed
In
lots allowed
transport
document
pursuant
to
Articles
19 toNot25allowed
UCP must be
other (specify):
submitted together with the other
prescribed documents. When
43T: Transhipment
Allowed
Not allowed
submitting
another document, e.g. forwarders receipt or dis44A: Place of Taking in Charge/ Dispatch from.../ Place
of Receipt
patch certificate,
warehouse
keepers warrant, etc. the date for
submission
should be stated Kobe
in the form of a specified number
Departure
Hamburg
of days
after
the
issue
date
of
the document.
Destination
59:
Beneficiary

30-04-2008
Page 1 / 2
Delivery Terms
The credit should show which charges are included in the
price:
Value of goods, packing costs, etc.
+ transport to port of loading
+ loading charges
= FOB (free on board)
+ freight charges to port of discharge
= CFR (cost and freight)
+ insurance to port of discharge
= CIF (cost, insurance, freight)
A detailed explanation of these
terms can be found in Inco6 lines max. 65 characters
terms (International Chamber of Commerce publication no.
560).44D: Shipment period
EXW (ex works)

FCA (Free Carrier)
FOB (Free on Board)
At

Other

Services
%/-
% is allowed
Original(s)
Commercial Invoice
Packing List
Chamber of Commerce
Beneficiary
Evidencing goods of
Evidencing goods of
Covering Seafreight
Full set of
Full set of
Notify
Copies
origin
origin
(Other)
(Other)
45
Chamber of Commerce in force at the time of the issuance.
and Address
of
Instruments Name
for Securing
Payment
Ourselves
Other Party
(specify)
Applicant
Contact Person
A. Berner
Elektro-Import AG
Voltastrasse 10
8000 Zurich
Description Our
of the
Goods AB
As a rule, the quantity and price are also stated. If the exact
Reference
Under Art. 4b UCP, banks should discourage the attempts to quantity of the goods is not known at the time when the credit
Mitsuro Bank
attach too many details, such
as
copies
of contracts or prois issued, the word about or approximately can be used; this
SWIFT CODE:
6 lines
65 characters
P.O.
Boxmax.
1202
Correspondent Bank
Osaka
532,
forma invoices, since this could
lead
toJapan
confusion and misunder- allows a deviation of 10% (Art. 30a UCP). If no such word is
44D: Shipment
period
standing.
The processing
of the credit should not be delayed or included, a deviation of 5% is permissible in certain circumcomplicated
unnecessarily
checks
andandcontrols.
(Art.Standby
30b UCP). If a tolerance is allowed for the credit
40A: Form of by
documentary
credit
Irrevocable
Irrevocable
transferable stances
Irrevocable
6 extensive
lines
max. 65 characters
However,
a
brief
description
of
the
goods
is
essential.
This
amount,
a
corresponding
should be specified with
EXW
(ex
works)
CFR
(Cost
and
Freight)
CIP
(Carriage
and Insurancetolerance
paid to)
30-04-2008
31D: Date of expiry
FCA
(Free
Carrier)technical
CIF (Cost
Insuranceregard
and Freight)
44D:be
Shipment
period
should
complete
and precise,
but
without
details.
to
the
quantity
of
the
goods.
Trade
terms
and place
6 lines
max.
65
characters
Credit Suisse
Correspondent Bank
FOB (Free on Board)
Other
(29 characters as
max.)
At Any Bank
per ICC-Incoterms 2000
(ex works)
CFR 2000"
(Costatand
Freight)
120EXW
Television
Sets "Brilliant Colours
USD
250 each. CIP (Carriage and Insurance paid to)
FCA (Free Carrier)
45A: Description
Goods
Nipponexport
Full Address
Trade termsofand
placeand/or
FOB (Free
on Board)
Other
2-Chome
Services
20 Hakarucho
CFR
and Freight)
At EXW (ex works)
as per(Cost
ICC-Incoterms
2000 CIP (Carriage and Insurance paid to)
Naniwa-Ko
59: Beneficiary
FCA
(Free
Carrier)
CIF
(Cost
Insurance
and
Freight)
Osaka
530, Japan
120FOB
Television
Sets
"Brilliant
250
Tolerance
quantity
ofColours
+ CPT 2000"
% /at- USD
%
is allowed
(Freein
on
Board)
(Carriage
paid
to)each.
Other
46A: Description
Documents of
Required
Copies
At
as per ICC-Incoterms 2000 Original(s)
45A:
Goods and/or
Services
Commercial Invoice
USD
30000.00
120
Television
Sets
"Brilliant
Colours
2000"
at
USD
250
each.
a brief description)
Packing List
Partial(onlyDeliveries/Transhipment
Exact
Tolerance
quantity
+
% / this
% is allowed
If partial Services
deliveries (Art. 31a, UCP)
arein to
be of
prohibited,
Chamber of Commerce
Beneficiary
46A:
Documents
Required
(only
a
brief
description)
Copies
About (+/- 10 Original(s)
%)
must be expressly stated in the Commercial
credit.
In the
case
Evidencing
goods
of of transferorigin
Tolerance of Invoice
+
/%
specify:
Tolerance
in
ofalso
+ A (GSP)
%/% is allowed
Certificate
ofquantity
Origin Form
Packing
List
able credits, the prohibition of partial
deliveries
precludes
Copies
Evidencing
goodsissued
of
Certificate
of Origin
and/or
visaed by Bank Original(s)origin
Credit
Suisse
Correspondent
41A:
Available
with
the transfer of fractions of the credit
to separate
second benefiCommercial
Invoice
Commerce
Beneficiary
(29Multimodal
characters max.)
(Place
of presentation
Any
Bank
FullChamber
set of of
transport document
(Other)
Covering
Multimodal of
Transport
Packing
List goods of
ciaries. documents) Covering Seafreight
Evidencing
origin
Full
set of
MarineorBill
Lading
(Other)
city)ofand/or
Any
Bank
in:of (country
Certificate
Origin issued
visaed by
Certificate
of Origin
(GSP)
Made
to Form
order A
and
blank endorsed
Chamber
ofout
Commerce
Beneficiary
Evidencing
goods
of of Elektro-Import
Payment
at sight
Deferred payment (specify below)originAcceptance (specify below)
Made
out
toor
order
Evidencing
goods
ofrail, the banks AG
origin
If the goods are to be transported
by
air,
road
Negotiation
(specify
below)
Mixed payment
(specify
Notify
Expeditio
AG, Frachtstrasse
100, 8000
Zurich below)
Full
set
of
Multimodal
transport
document
(Other)
Certificate
of
Origin
Form
A
(GSP)
41A:
Available
by
days after
of shipment
Date of invoice
Sight
accept a transport
document thatAtMarked
allows
transhipment
even
if
Freight
collectDate
Freight
prepaid
Full
set offor goods
Marine
(Other)
Covering Seafreight
Evidencing
ofBill of Lading
origin
(define):
Issued by
the credit itself does not permit transhipment
ii UCP)*.
Made out (Art.
to order24e
and blank
endorsed
Full
set of (Original
Multimodal
transport document
(Other)
Covering Multimodal
CoveringTransport
Airfreight
Airwaybill
shipper)
Madeprohibit
out to for
order
of Elektro-Import AG
An applicant for
a credit
who wishes
transhipment
Full set to
of Certificate
Marine Bill
of Lading
(Other)
Covering
Seafreight
Covering
Landfreight
Forwarder's
Receipt
(FCR)
Notify
Expeditio AG,of
Frachtstrasse
100, 8000 ZurichInternational Road Waybill (CMR)
4 lines
max. 35
characters
Made
out
to orderare
and excluded
blank endorsed
must explicitly state that the corresponding
articles
Duplicate
Railwaybill
Courier Receipt
Marked
Freight
collect
Freight prepaid
Issued
by
42A: Drawee
Issued
by
in the
application and in the credit.
The
simple
condition tranNotify
consigned
Covering Airfreight
Airwaybill to:
(Original
for shipper)
shipment prohibited
is
not
sufficient.
Marked
Freight
collect
Freight prepaid
Notify
Issued by
Marked
Freight collect
Freight prepaid Courier Receipt
42C: Drafts at
Duplicate
days fromRailwaybill
Covering Airfreight
Airwaybill
(Original
for
shipper)
Insurance
cover
taken
care
by
the
applicant
Issued by
Allowed
Notcertificate
allowed
In ... %lots
110
Insurance policy
or
covering
of allowed
goods
value and
the Waybill
following(CMR)
risks
Forwarder's
of Receipt
(FCR)
International
Road

consigned
to:Certificate
other
(specify):
all risks
incl.Railwaybill
war, strike riot, and civil commotion
Duplicate
Courier Receipt
Notify
43T: Transhipment
Issued by
Allowed
Not
allowed
Marked
Freight
collect
Freight prepaid
Other documents:
consigned
to: taken care by the applicant
44A: Place of Taking in Charge/ DisInsurance cover
Notify
Freight
collect
Freight prepaid
all risks incl. war, strike
riot, and
civil commotion
Remarks/Bank
Account KobeMarked
Departure
In order Destination
to avoidOther
misunderstandings,
thepolicy
applicant
should
also
110 ... % of goods value and the following risks
documents: Hamburg
Insurance
or certificate
covering
44D: Shipment period

44B: the
Place of
Final Destination/
For
specify
bank
account(s)
to which
the credit
amount,
71B: Charges
All commissions
and charges
for ourcomaccount
All
and charges
for Beneficiary's account
Other documents:
missions
and
charges
are to30-04-2008
be commissions
debited. This
is particularly
44C:
Latest
Date
of
Shipment
important, for example, if he hasforhedged
the exchange risk by
beneficiary's account
means
of
a
forward
foreign
exchange
contract.
48:
Period
for
Presentation
Documents
to
beand
presented
21 days
Other:
71B:
Charges
All
commissions
chargeswithin
for our account
49: Confirmation Instructions

71B: Charges
48: Period for Presentation
72:
49:
48:

Page 1 / 2
Aftercharges
the date
Transport
document
Other:
All commissions and
forof:Beneficiary's
account
Correspondent
Tofor
add
confirmation
Your (Creditbank
Suisse) charges
ourtheir
account,
foreign bank charges
All
and charges for our account
for commissions
beneficiary's account
Documents
to
be
presented
within
21 days
Your (Credit
for ourasaccount,
foreign bank chargesOther:
Documents
to beSuisse)
sent
tocharges
Credit
Suisse
follows:
After
the date
of:
Transport document
Other:
for
beneficiary's
account
By courier service
1 lotTo add
2 lots
By registered mail in Not 1tolot
2 lots
Correspondent
bank in
their confirmation
add their
confirmation
21 days
Other:
After the date of:
Transport to
document
Other:directly
You are authorized
debit our account
Correspondent
bank
add their
confirmation
Documents to be
sent to CreditTo
Suisse
as follows:
Signature
49: Confirmation Instructions
72: Sender to Receiver Information
The applicants
signature
the
application
in
law.
courier
service in binding
1 lot
2 lots
Other Conditions
/ Remarks makes By
Zurich,
1. April 2008
Place and date:
72:
1 lot
2 lots
Documents to be sent to Credit Suisse
follows:
Youas
are
authorized to debit our account directly
Page 2 / 2
By courier service in
1 lot
2 lots
1 lot
2 lots
You areand
authorized
to of
debit
account directly
Stamp
Signature
theour
Applicant
Page 2 / 2
Page 2 / 2
* Applicable to Multimodal Transport Documents as well (Art. 19c ii UCP).

46
CHECKLIST
for buyers applying for a documentary credit
Does the application state whether the credit needs to be
confirmed or merely advised by a correspondent bank?
Has the type of credit been specified, e.g. transferable?
Can the beneficiarys bank be specified?
Is there a need for currency hedging?
Should the credit amount be expressed as a fixed total
amount, a maximum amount or an amount with a margin of
tolerance (Art. 30 UCP)?
Has the expiry date been specified (Art. 6 UCP)?
Is a place for presentation of the documents specified (Art. 6
UCP)?
Can the exporter provide all the required documents without
difficulty?
Should a certificate of analysis or quality be stipulated?
In the case of an acceptance credit, does the application
state that the credit is to be available against a term bill of
exchange (e.g. Draft drawn at 60 days after sight an Mitsuro
Bank, Osaka)?
Does the transport insurance have to cover any special risks,
and are these stated in the application (Art. 28gi UCP)?
Is it necessary to specify a notify party?
Does the latest shipping date allow sufficient time for the
documents to be presented before the credit expires (Art.
14c UCP)?
Do the delivery terms (i.e. FOB, CFR or CIF) clearly explain
the price?
Is the description of goods concise, but at the same time
complete and exact?
Should a tolerance be specified regarding the quantity of
goods (Art. 30 UCP)?
Should partial deliveries (Art. 31 UCP) and/or transhipment
be prohibited?
Does the application indicate the bank account to which the
credit amount, etc. should be debited?
Has the application been duly signed?
4.2 Notification of the Issue of the Credit

Provided the application contains no ambiguities, the documentary credit can be issued. The issuing bank will, of course, first
ensure that the applicant is adequately covered by a line of credit
or by the assets in his account. The issuing bank usually notifies
a correspondent bank located in the country (and if possible the
town) of the beneficiary. Only exceptionally does the notification
go direct to the beneficiary.
4.3 Advice or Confirmation to the Beneficiary

lf the correspondent bank in the beneficiarys country is instructed
merely to advise the credit, it forwards the prescribed text to the
beneficiary without any liability on its own part. However, the
bank must take reasonable care to check that the credit appears
authentic (Art. 9b UCP) The advice serves to acknowledge that
the received conditions have been completely and exactly forwarded to the beneficiary.
The issuing bank often has no direct relationship with the beneficiarys bank. It then forwards the credit to its correspondent
bank in the beneficiarys country (or a third country), and
requests that the beneficiarys bank be advised of the credit.
The function and responsibility of this latter bank, the so-called
second advising bank, are described in UCP 600 (Art. 9c,
UCP).
The correspondent bank may, if requested or authorized by the
issuing bank, add its own confirmation to an irrevocable credit.
By doing so, it assumes a definite and independent obligation in
addition to that of the issuing bank (Art. 2 definition of Confirmation and Art 8 UCP). Before adding its confirmation, the
correspondent bank will therefore ensure that the credit is formally in order and that the issuing bank is completely trustworthy.
The correspondent bank is not bound to confirm the credit. If it
is not prepared to add its confirmation, it must inform the issuing
bank without delay and may advise the credit to the beneficiary
without adding its confirmation (Art. 8d UCP).
47
As soon as the exporter receives the advice or confirmation, he

should check that the terms and conditions of the credit are in
conformity with the contract and that he is able to comply with
them. If not, he must request the buyer to provide the necessary
amendments immediately.
Special attention should be paid to the following points:
Are the names and addresses of the applicant and the beneficiary correctly stated?
Is the credit subject to the UCP (UCP, Art. l)?
Has the credit been issued in the agreed basic form (irrevocable but unconfirmed, or irrevocable and confirmed) and
with the agreed method of settlement (sight, deferred payment, acceptance, etc.)?
At which place do the documents have to be presented?
At which bank is the credit available for payment at sight,
deferred payment, acceptance or negotiation?
Does the credit comply with the terms of the commercial
contract with regard to the following points:
amount (based on the sales price of the goods) and terms
of payment
description and origin of goods
terms of delivery (i.e. freight costs, insurance, etc.)
expiry date and shipping date?
Can the stipulated insurance cover be provided?
Can all the documents be produced on time and in the stipulated form and number and in compliance with the provisions
of the UCP, the documentary credit and international standard
banking practice?
Can the goods be shipped on time by the prescribed mode
of transport and route?
Are part-shipments, transhipment and/or on-deck loading
possible (if necessary and agreed)?
Is payment still assured, if, for example, the buyer should
arbitrarily refuse or delay signature of a work progress certificate (in the case of service transactions)?
48
The beneficiary does not have to expressly accept the documentary credit. He is deemed to have accepted it if he presents
the required documents to the correspondent bank or issuing
bank on time.
If the beneficiary finds any discrepancies in the credit, he must
immediately report them directly to the buyer and request
him to instruct the issuing bank to make the necessary amendments. The issuing bank and confirming bank are irrevocably
bound by any amendment that they issue (in the case of the
issuing bank) or confirm (in the case of the confirming bank).
The beneficiary may communicate his acceptance or rejection
of the amendment, or choose to remain silent. In the latter case,
documents presented by the beneficiary in accordance with the
original terms of the credit constitute a valid refusal of any
amendment received.
Much inconvenience and delay can be avoided if the terms and
conditions of the credit are limited to essentials. An unnecessarily detailed description of the merchandise does not give the
importer any additional security but merely increases the amount
of information that has to be checked and thereby creates additional sources of error.
The exporter always has the option of not availing himself of the
credit and letting it expire; he is under no obligation to inform the
importer or the banks of his decision. The credit lapses automatically if the beneficiary does not present the documents by
the expiry date.
In the following four examples (Fig. 18, 19 and 20), the parts with grey
shading define the role of the bank and the basic form of the credit. As we
pointed out above, the basic form of the credit largely determines the degree
of security enjoyed by the beneficiary.
Issue of an Irrevocable Credit with Request for Confirmation (Fig. 18)
< MT700 ISSUE OF A DOCUMENTARY CREDIT >

700
3 April 2008
MITSURO BANK, OSAKA, JAPAN
Sequence of Total
1/1
:40A:
IRREVOCABLE
:20:
SGAT 112-137312
:31C:
Date of Issue
03-APR-08
:40E:
Applicable Rules
UCP LATEST VERSION
:31D:
21-MAY-08 IN JAPAN
:50:
Applicant
ELEKTRO-IMPORT AG
VOLTASTRASSE 10; 8000 ZURICH, SWITZERLAND
:59:
Beneficiary
NIPPONEXPORT; 20 HAKARUCHO 2-CHOME;

NANIWA-KU; OSAKA 530, JAPAN
:32B:
USD 30,000.
:41A:
Available with By
MITSURO BANK, OSAKA; BY PAYMENT
:43P:
Partial Shipments
ALLOWED
:43T:
Transshipment
ALLOWED
:44E:
Port of Loading/
KOBE
:44F:
Port of Discharge/
HAMBURG
:44C:
Latest Date of Shipment
30-APR-08
:45A:

or Services
120 TELEVISION SETS 'BRILLIANT COLOURS 2000'

AT USD 250. EACH, CIF HAMBURG
:46A:
Documents Required
:71B:
Charges
ALL BANK CHARGES AND COMMISSIONS OUTSIDE

SWITZERLAND ARE FOR THE ACCOUNT OF BENEFICIARY.
:48:
LATEST 21 DAYS AFTER DATE OF SHIPMENT BUT

WITHIN THE VALIDITY OF THE CREDIT
:49:
CONFIRM
:78:
Instructions to Paying Bank
UPON RECEIPT OF YOUR SWIFT CONFIRMING THAT YOU

HAVE TAKEN UP DOCUMENTS IN CONFORMITY WITH THE
TERMS OF THE CREDIT, WE SHALL REMIT COVER IN
ACCORDANCE WITH YOUR INSTRUCTIONS.
:27:
SIGNED COMMERCIAL INVOICE, 5-FOLD

FULL SET 'CLEAN ON BOARD' OCEAN BILL OF LADING,
MADE OUT TO ORDER OF ELEKTRO-IMPORT AG, ZURICH,
MARKED 'FREIGHT PREPAID', NOTIFY EXPEDITIO AG,
FRACHTSTRASSE 100, 8000 ZURICH
INSURANCE POLICY OR CERTIFICATE COVERING 110PCT
OF CIF INVOICE VALUE, COVERING 'ALL RISKS', INCL.
RISKS OF WAR, STRIKES, RIOTS AND CIVIL COMMOTIONS.
PACKING-LIST, 2-FOLD
49
Advice of an Irrevocable Documentary Credit (Fig. 19)

(= unconfirmed documentary credit)
CREDIT SUISSE
P.O. Box 100
CH-8070 Zurich

Tel.
Telefax
Telex
SWIFT
+41 (0)44 333 11 11

+41 (0)44 332 29 40
812412 CS CH
CRESCHZZ80A
Registered letter

Peter Muster
Elektromotoren AG
Sinusstrasse 90
CH-8000 Zurich
March 21, 2008
+41 44 334 62 35
SGAT 112-136989
Our reference:
Dear Sir/Madam
The bank named below has mandated us to advise you of the issuance of a documentary credit, of which
you are the beneficiary. The text as well as the terms and conditions are enclosed with this letter. Please
note the terms and conditions that apply to this documentary credit. If you do not accept one of the terms
and conditions, please contact the applicant to request that it be amended.
Banque dAfrique du Nord
100, rue El Alamin
Tunis, Tunisie
Reference number:
B-157/778
Instructing party:

Compagnie pour Matriel Electrique

Tunis
Amount:
USD 36,500
Issuing bank:

Expiration date:
April 25, 2008 (in Switzerland)

We are sending you this letter and the enclosed advice without any obligation on our part.
This documentary credit is subject to the Uniform Customs and Practice for Documentary Credits of the
International Chamber of Commerce in Paris, France, which were in force on the date it was issued. The
bank-to-bank reimbursement is subject to the Uniform Rules for Bank-to-Bank Reimbursements under
Documentary Credits of the International Chamber of Commerce in Paris, France, which were in force on
the date it was issued.
Yours sincerely
CREDIT SUISSE
50
Confirmation of an Irrevocable Documentary Credit (Fig. 20)

(= confirmed documentary credit)
CREDIT SUISSE
P.O. Box 100
CH-8070 Zurich

Tel.
Telefax
Telex
SWIFT
+41 (0)44 333 11 11

+41 (0)44 332 29 40
812412 CS CH
CRESCHZZ80A
Registered letter

Hans Muster
Instrumenten AG
Wattstrasse 50
CH-8000 Zurich
April 14, 2008
+41 44 332 89 19
SGAT 112-137542
Our reference:
Dear Sir/Madam
The bank named below has mandated us to advise you of the issuance of a documentary credit, of which
you are the beneficiary. The text as well as the terms and conditions are enclosed with this letter. Please
note the terms and conditions that apply to this documentary credit. If you do not accept one of the terms
and conditions, please contact the applicant to request that it be amended.
Commercial Bank
PO Box 1001
HK-Hong Kong
Reference number:
C-123-45
Instructing party:

Chai Chung Electronics Ltd.

Hong Kong
Amount:
CHF 45,000
Issuing bank:

Expiration date:
May 31, 2008 (in Switzerland)

We are attaching our confirmation to this documentary credit.
This documentary credit is subject to the Uniform Customs and Practice for Documentary Credits of the
International Chamber of Commerce in Paris, France, which were in force on the date it was issued. The
bank-to-bank reimbursement is subject to the Uniform Rules for Bank-to-Bank Reimbursements under
Documentary Credits of the International Chamber of Commerce in Paris, France, which were in force on
the date it was issued.
Yours sincerely
CREDIT SUISSE
51
5. Utilization of the Credit

5.1 Basic Principles
The exporter has dispatched the goods or performed the service on time. The documents required under the credit
are ready for presentation.
Before the exporter presents the documents to his bank he
must ensure that they fully meet the requirements laid down in
the credit. All the documents called for must be present (completeness); they must not contravene any stipulation of the
credit, the UCP, or international standard banking practice (correctness); and they must not be at variance with each other
(consistency, Art. 14d UCP). The banks decision on whether
or not to accept the documents will be based strictly on the
principle that the documents themselves and the timing of
their presentation must comply with the terms of the
credit.
The bank must not take up any documents that do not fully meet
the requirements of the credit, regardless of whether or not the
underlying transaction has been carried out correctly. The credit
is a completely separate transaction from the business contract
on which it is based (Art. 4 UCP). Thus the banks decision must
be based on the documents alone (Art. 14a UCP).
a) Compliance with Documentary Requirements

The basic principle of document conformity is that the bank
must check the presented documents carefully against the
wording of the terms of the credit. Payment cannot be made
unless the documents are in strict conformity with the stipulations of the credit, the UCP and international standard banking
practice.
lf no latest shipping date is specified, the expiry date of the

credit is regarded as the latest date for shipment. The interval
between the date of shipment reflected in the transport documents and the presentation of the documents at the bank must
not exceed 21 days, unless the terms of the credit provide for a
longer period.
A reference is necessary in this regard to International Chamber

of Commerce publication no. 681 for banks and all parties that
issue documents for utilization in documentary credits. This publication represents a summary of decisions and positions in short
form that summarize what in practice is considered a compliant
issuance of documents. The guidelines are designed in such a
way that only issues are addressed which have caused conflict
in the past. It is not possible to include all variations in a single
publication. This is why Article 14d of UCP 600 refers only to
standard international banking practice and not to the corresponding publications or their publication numbers.
The position has been summed up very well in a judgment by an English
court: There is no room for documents which are almost the same or which
will do just as well. (Equitable Trust Co. v. Dawson Partners, 27 Lloyd L.R.
49, 1926[SC1])
52
b) Compliance with Time Limits

The expiry date and latest shipping dates specified in the credit
must be strictly complied with. If the documents are presented
too late, the bank is not allowed to honor them.
lf the expiry date of the credit falls on a Sunday or public holiday,

the latest date for the presentation of documents is extended to
the next business day. However, banks will refuse transport
documents which bear a date of shipment later than the expiry
date stipulated in the credit. If a latest date for shipment is stipulated in the credit, this date is not affected by such an extension
and the 21-day limit for credits without a latest shipping date is
not extended (Art. 29c UCP).
The formulas used in specifying the time limits for documentary credit operations have precisely defined meanings. For example, shipment in the
middle of January covers the period from January 11 to January 20 inclusive; shipment on January 21 would therefore be too late (Art. 3 Interpretations UCP and BGE 87 II 234 ff. [1961]).
5.2 Documents
a) Overview
Before presenting the required documents, the beneficiary must
check the following points:
Is the credit still valid and has the latest date for shipment (if
stipulated) been complied with?
Are all the stipulated documents present in the required numbers?
Are the packing marks, the number of packages (packing
units) and the indications of weight identical in all the documents?
b) Documents of Title
aa) Overview
According to Art. 965 of the Swiss Code of Obligations, a
document of title is any document to which a right is attached
in such a way that the right cannot be exercised or transferred
without the document. Where the transport document is also
a document of title, as in the case of a bill of lading or warehouse keepers warrant, the transport documents actually represent the goods.
Documents of title fall into three groups:
Order
Unless otherwise stipulated, banks will accept as originals documents that have been produced or appear to have been produced
by reprographic systems
by or as a product of automated or computerized systems
as carbon copies
provided the documents are marked as originals and carry an
authentication as described in Art. 17b UCP.
In Swiss law, the documents commonly used in international
trade can be divided into two classes:
Documents of title:
e.g. bill of exchange, bill of lading, warehouse keepers
warrant.
Documents of evidence and accompanying documents:
e.g. commercial invoices, air waybills, rail consignment notes,
insurance policies/certificates, packing lists, certificates of
origin, warehouse receipts, forwarders certificates of receipt,
work progress certificates.
The UCP classify documents as follows:
Documents covered by detailed rules:
Commercial invoices: Art. 18 UCP
Transport documents (i.e. documents indicating loading on
board or dispatch or taking in charge): Art. 1925 UCP
Insurance documents: Art. 28 UCP
Other documents:
(i.e. documents other than transport documents, insurance
documents and commercial invoices): Art. 14f UCP.
The most important documents are described in the following
pages. The checklists for the various types of document are
intended as a practical help for people involved in documentary
credit transactions. They summarize the points that require
particular attention when the documents are examined.
documents:
The person to whose order the document is made out has
the right to the property represented by the document. He
can transfer this right simply by endorsement.
An endorsement is a written note of transfer on the back of a document.
There are no requirements regarding the form of an endorsement; the
signature of the holder suffices.
The debtor of an order document has only limited defenses. Any
defenses or objections that he pleads must be based on the invalidity of
the instrument (e.g. issuers incapacity to contract, expiry under a statute
of limitations) or in personal defenses against the creditor (Swiss Code
of Obligations, Art. 1146; for bills of exchange, Art. 1007).
A distinction is made between documents that are order documents by
law (e.g. bills of exchange) and those that can be made out to order (e.g.
bills of lading, warehouse keepers warrants),
Bearer
documents:
The bearer of the document has the right to the property
represented by the document. Transfer is effected by delivery
of the document.
The debtor of a bearer document has the same rights of defense as the
debtor of an order document.

Documents made out to a named person:

The right rests solely with the person named in the document. Transfer can be effected only by assignment.
Assignment is a written contract of transfer, which may be written on the
document itself or on a separate paper.
In the case of a document made out to a named person, the debtor is
entitled to all such defenses against any beneficiary as were available to
him against the original creditor (Swiss Code of Obligations, Art. 169).
To these may be added defenses arising from his relationship with the
new creditor (assignee). The position of the debtor vis--vis the new
creditor must not be worse than his position vis--vis the old creditor.
53
bb) Bill of Exchange (Draft)

In Swiss law, a bill of exchange is an unconditional order to
pay a certain sum of money (Art. 991 of the Swiss Code of
Obligations). This order can be addressed to the drawer himself
(in which case the document becomes a promissory note) or to
a debtor (in which case it is also referred to as a draft). In
documentary credit operations, the drawee of a bill of exchange
is usually a bank.
Bills of exchange serve primarily as instruments of short-term
credit (e.g. supplier credit). A bill of exchange is evidence of an
unconditional and abstract obligation to make payment.
Thus the obligation is quite separate from the underlying transaction (documentary credit, contract of sale, etc.). The drawee
cannot refuse to make payment to the bona fide holder of the
bill of exchange on the basis of objections relating to the underlying transaction. In the event of non-payment of a bill of
exchange, most countries have special procedures for accelerating the recovery of the debt. Being an order instrument, a bill
of exchange is transferable by endorsement.
CHECKLIST Bill of Exchange

Does the amount of the bill of exchange conform to the
terms of the credit?
lt must not be higher than the invoice amount (unless the credit
specifically allows for this, e.g. states that interest is to be added).
D
oes the amount in words agree with the amount in
figures?
Is the bill payable as specified in the credit (at sight or at
a given term after sight or after a specific date)?
Is the bill correctly dated?
Is the bill drawn, as stipulated, on the buyer or the (correct) bank?
Has the bill been duly signed?
Does the bill carry an endorsement on the reverse (if
necessary)?
The bill has to be endorsed if it is made out to the order of the
beneficiary.
(See Fig. 21, Bill of Exchange on the facing page)
54
cc) Bill of Lading

A bill of lading the most important document in overseas transactions is a document evidencing shipment. It is issued by
the carrier or his agent as a receipt for goods accepted for carriage by sea. It also contains the terms and conditions of the
contract of carriage.
As already mentioned, a bill of lading is a document of title; it
actually represents the goods being shipped. Only the
holder of the bill of lading can take possession of the goods. It
is usually made out to order, and can therefore be transferred by
endorsement.
As a rule, a bill of lading is issued in several signed originals (plus
copies). All the originals together are referred to as a full set.
As soon as one of them has been presented for the purpose of
obtaining the release of the goods, the others become invalid.
The bank will therefore insist that the beneficiary present the full
set, unless the credit contains a provision to the contrary.
There are three basic types of bill of lading:
On board bill of lading
An on board (or shipped) bill of lading is issued after the
goods have been received on board ship. It is the most secure
type of bill of lading from the point of view of the importer and
the banks, since it shows where and when and on which
vessel the goods were dispatched.

Received for shipment bill of lading

This merely confirms that the shipping company has received
the goods for shipment.

Through bill of lading

This type is issued when the journey is going to involve various modes of transport (e.g. ship/rail).
Bill of Exchange (Fig. 21)
Place and date of issue:
currency and amount:
8000 Zurich
At
March 20th, 2008
USD
pay against this
90 days sight
45,000.Bill of Exchange
Sole
to the order of: ourselves

the amount of: US-Dollars fortyfivethousand------------------------------------------------------------------------------------------
Drawee:
Meier + Co., Zurich
The New York City Bank
Accepted:
New York, NY 10016, USA
stamp and signature of the drawer
Drawn under Letter of Credit no. 0494-56794
issued on
1.2.2008
by The New York City Bank, New York
first
CHF
second
EUR
GBP
currency and amount:
edit
pay against this
he
edit
Sole
Bill of Exchange
ich
to the order of: ourselves
ord
Sui
er o
sse
90 days sight
45,000.-
Sui
USD
Zur
At
March 20th, 2008
f Cr
USD 8000 Zurich
sse
PlacJPY
e and date of issue:
o.,
sole
Zur
ier
+C
ier
+C
o.,
Me
to t
ich
er o
Meier + Co., Zurich
stamp and signature of the drawer
Me
Pay
to t
Accepted:
ord
The New York City Bank

New York, NY 10016, USA
he
Drawee:
Pay
f Cr
the amount of: US-Dollars fortyfivethousand------------------------------------------------------------------------------------------
Drawn under Letter of Credit no. 0494-56794
issued on
1.2.2008
by The New York City Bank, New York
first
CHF
second
EUR
sole
GBP
JPY
USD
55
CHECKLIST Bill of Lading

Does the bill of lading indicate the name of the carrier
and has it been signed or authenticated by the carrier or
a named agent for or on behalf of the carrier, or the
master or a named agent for or on behalf of the master
(Art. 20a i UCP)?
Are the goods consigned as stipulated in the credit (i.e.
to order, to order of a named person or firm, or direct to
a named consignee without a to order notation)?

Has the bill of lading been properly endorsed (if this is
necessary)?
Is the notify address exactly as stipulated in the credit
(Art. 14j UCP)?
Is the bill of lading an on board (shipped) bill of
lading?
To qualify as an on board or shipped bill of lading, it must either
be made out on a form containing wording to this effect or it must
carry an on board notation from the carrier or his agent (Art. 20a
ii and iii UCP).
Art 20a iii is particularly important in this regard. The on board
notation must refer to the port of dispatch and the vessel named in
the credit, and the document must bear the same port of destin-
the bill of lading indicates that the goods will be transhipped, is such transhipment permissible (i.e. not
expressly forbidden) under the terms of the credit (Art.
20b and c UCP)? If so, does the bill of lading cover the
whole transport route?
Are the marks, weights, etc. consistent with those indicated in the other documents?
Do references to the payment of freight costs, if present,
conform to the terms of delivery in the credit, and do the
freight charges shown in the bill of lading match those in
the commercial invoice?

In the case of CFR and CIF contracts, the bill of lading must bear
the words freight paid or freight prepaid; for FOB deliveries, the
required wording is freight collect.
Does the date of shipment shown in the bill of lading

conform to the requirements of the credit?
The date of a shipped or on board bill of lading or the date of a
subsequently added on board stamp is regarded as the date of
shipment.

ation as that named in the credit.

Is
the bill of lading marked on deck?
If so, the goods have been loaded on deck. This is not permissible
unless specifically authorized in the credit (Art. 26 UCP).

Is
Are the port of loading and port of destination exactly as

stipulated in the credit?

Does the document contain the word intended or some
similar qualification in relation to the ship and/or port of
loading and/or port of discharge?
Such qualifications are only allowed in certain circumstances (Art.
20a iii UCP).

56
the bill of lading marked charter party?
A "charter party" bill of lading has to be expressly authorized in the

credit (UCP, Art. 20a vi), since the contract which it evidences does
not constitute a contract of carriage for particular goods but a contract for the charter of freight space. Please refer to the checklist
for and graphic of the charter party bill of lading on pages 58 and
59.
If
If
the credit does not stipulate a specific period of presentation for the documents, will the documents be presented within 21 days of the date of shipment, i.e. the
date of issue of the bill of lading or the date of the on
board notation, if there is one (Art. 14c UCP), and in
any case not later than the expiry date of the credit?
Is the bill of lading clean, i.e. without any derogatory
clause referring to the condition or packing of the goods
(e.g. several bags torn, iron bands rusty, one case
defective, part of goods decayed; Art. 27 UCP)?
Have alterations on the bill of lading been properly
authenticated?
Any alteration must be accompanied by an alteration approved
stamp and the signature or initials of the carrier or a named agent
acting for or on behalf of the carrier, or of the master or a named
agent acting for or on behalf of the master.
Is the bill of lading in a full set of properly signed originals

(Art. 20a iv UCP)?
(See Fig. 22, Bill of Lading on the facing page)
Bill of Lading (Fig. 22)
ORIGINAL
SCHENKERocean
Ocean or Combined Transport Bill of Lading

(4) B/L No.
(1) Shipper/Exporter
CHZRH42068
NIPPONEXPORT
Naniwa-KU
OSAKA 530, Japan
( 5) Reference Nos.:
1235
( 2) Consignee
( 6)
TO THE ORDER OF:

Elektro-Import AG
Voltastrasse 10
CH-8000 Zurich
(7) For Delivery of Goods apply to:
( 3) Notify Party
Expedition AG
Frachtstrasse 100
CH-8000 Zurich
( 8) Vessel/Voyage (see clause 14.1 of the Bill of Lading terms)
( 11) Place of Receipt (Applicable only when document used as Combined Transport B/L)
MV Seastar
(9) Port of Loading
Kobe
Kobe CFS
(10) Port of Discharge
Hamburg
(12) Final Destination (Applicable only when document used as Combined Transport B/L)
Hamburg CFS
BELOW PARTICULARS FURNISHED BY SHIPPER CARRIER NOT RESPONSIBLE FOR MERCHANTS USE ONLY AND NOT PART OF THE BILL OF LADING CONTRACT
(13) Kind of packages; description of goods; marks and Numbers; Container No./Seal No.
(14) Gross Weigh
(15) Measurement
said to contain:
ElektroImport
BC 2000
Made in
Japan
C1-120
120 Cardboard Boxes
3,600. KGS
TELEVISION SETS
ORIGINAL
L/C SGAT 112-137312
L.C.L./L.C.L.
SHIPPED ON BOARD
25.4.2008
in Container ISCU 8973458 40 Container
Above particulars as declared by Shipper, but without responsibility of or representation by the Carrier (see clause 8).
(16) Carriers Receipt (see clauses 1 and 8)
Total number of containers or packages
received by Carrier:
( 1 7 ) F r e i g h t a n d C h a r ge s
6
SIX
( 1 8 ) P r e p ai d
Freight Prepaid
( 1 9 ) C ollec t
Seal No. 987654

RECEIVED by the Carrier in external apparent good order and condition unless
otherwise stated the number of containers, packages or other customary freight
units to be transported to such place as agreed, authorized or permitted herein
and subject to all the terms and conditions appearing on the front and reverse of
this Bill of Lading either written, printed or stamped or otherwise incorporated
by which the Merchant agrees to be bound in accepting this Bill of Lading. The
particulars given above as stated by the Merchant and the weight, measure,
quantity, marks, condition, contents and value of the Goods considered unknown
by the Carrier. In witness whereof the number of original Bills of Lading stated
on this side have been signed and wherever one original Bill of Lading has been
surrenderred any others shall be void.
(20) Declared Cargo Value (see clause 7.3):
.00
(21) Number of Original Bills of Lading:
3/THREE
(22) Place and Date of issue of B/L:
Kobe April 25, 2008

(23) Signed and issued as agents for
SCHENKER ocean as Carrier by:
01 /07
Schenker Japan Ltd.
ORIGINAL
57
CHECKLIST
Charter Party Bill of Lading (C/P Bill of Lading)
Has it been signed or authenticated by the master or a
named agent for or on behalf of the master, by the vessels owner or a named agent for or on behalf of the
vessels owner, or by the charterer or a named agent for
or on behalf of the charterer? (Art. 22a i UCP).
Are the goods consigned in the C/P bill of lading as
stipulated in the documentary credit (i.e. to order, to
order of a named person or firm, or directly to a named
consignee without a to order notation)?
Has the C/P bill of lading been properly endorsed (if this
is necessary)?
(Art. 14j UCP)?
Is the C/P bill of lading an on board (shipped) bill of
lading?
To qualify as an on board or shipped bill of lading, it must either
be made out on a form containing wording to this effect or it
must carry an on board notation from the carrier or his agent (Art.
22a ii and iii UCP). Art. 22a iii is particularly important in this regard.
The on board notation must refer to the port of dispatch and the
vessel named in the credit, and the document must bear the same
port of destination as that named in the credit.
Is the C/P bill of lading marked on deck?

If so, the goods have been loaded on deck. This is not permissible
unless specifically authorized in the credit (Art. 26 UCP).
A
re the port of loading and port of destination exactly as
stipulated in the credit? The port of destination can be
expressed in the form of several ports or as a geographic
region, in accordance with the credit.
Are the marks, weights, etc. consistent with those indicated in the other documents?
D
o references to the payment of freight costs, if present,
freight charges shown in the C/P bill of lading match
those in the commercial invoice?
In the case of CFR and CIF contracts, the C/P bill of lading must
bear the words freight paid or freight prepaid; for FOB deliveries, the required wording is freight collect.
Does the date of shipment shown in the C/P bill of

lading conform to the requirements of the credit?
The date of a shipped or on board C/P bill of lading or the date
of a subsequently added on board stamp is regarded as the date
of shipment.
If the credit does not stipulate a specific period of presentation for the documents, will the documents be presented within 21 days of the date of shipment, i.e. the
date of issue of the C/P bill of lading or the date of the
on board notation, if there is one (Art. 14c UCP), and
in any case not later than the expiry date of the credit?
Is the C/P bill of lading clean, i.e. without any derogatory clause referring to the condition or packing of
the goods (e.g. several bags torn, iron bands rusty,
one case defective, part of goods decayed, Art. 27
UCP)?
Have alterations on the C/P bill of lading been properly
authenticated?
stamp and the signature or approval of the master, or a named
agent for or on behalf of the master, or by the vessels owner or a
named agent for or on behalf of the vessels owner, or signed or
authenticated by the charterer or a named agent for or on behalf of
the charterer?
Is the C/P bill of lading in a full set of properly signed

originals (Art. 22a iv UCP)?
(See Fig. 23 on the facing page, Charter Party Bill of Lading)
58
Charter Party Bill of Lading (Fig. 23)
Page 2
CODE NAME :CONGENBILL.EDITION 1994
B/L No1
Shipper
Commodities Ltd
Moscow, Russia
BILL OF LADING
TO BE USED WITH CHARTER - PARTIES
Reference
Consignee
Trading Co. Ltd

Zug, Switzerland
ORIGINAL
Notify address
Trading Co. Ltd

Zug, Switzerland
Vessel
MV Novosibirsk
Port of loading
St. Petersburg
Durban, South Africa
Port of discharge
Shippers description of goods
Gross weight
Russian Coal as per P/I-No. 12345.6
MTS
27,998.490
CLEAN ON BOARD
(of which cargo on deck at Shippers risk; the Carrier not

being responsible for loss ore damage howsoever arising)
Freight payable as per

CHARTER-PARTY
SHIPPED
FREIGHT PAYABLE AS PER CHARTER PARTY
at the Port of Loading in apparent good order and condition on board the Vessel for
carriage to the Port of Discharge or so near thereto as she may safely get the goods specified above.
Weight, measure, quality, quantity, condition, contents and value unknown.
IN WITNESS
FREIGHT ADVANCE.
whre of the Master or Agent of the said Vessel has signed the number of Bill of
Lading indicated below all of this tenor and date, any one of wich being accomplished the other shall be void.
Received on account of freight:
FOR CONDITIONS OF CARRIAGE SEE OVERLEAF

Time used for loading
days
hours
Freight payable at
Place and date of issue
St. Petersburg
Number of Original
B/L
3 (THREE)
11/02/2008
Signature
THE MASTER OF M/V

CAPT. Carlos Gonzales
Novosibirsk
59
c) Documents of Evidence and Accompanying Documents

aa) Overview
Documents of evidence and accompanying documents are not
documents of title, i.e. they do not represent the goods to which
they relate. The consignee can therefore take delivery of merchandise sent by air or rail without having to present a waybill or
consignment note.
bb) Air Waybill (in the UCP generally referred to as an air
transport document)
An air waybill is evidence of a contract of carriage between the
carrier and the sender and certifies that the carrier has received
the goods for dispatch. It also contains instructions for the handling, routing and release of the goods.
CHECKLIST Air Waybill

Are the consignees name and address and the airports
of departure and destination in agreement with the terms
of the credit?
Does the document indicate the name of the carrier?
Is the carriers signature or authentication identifiable as
that of the carrier? If the document is signed or authenticated by a named agent for or on behalf of the carrier,
does it indicate the name and capacity of that party (carrier)?
Do any statements concerning the payment of freight
conform to the terms of the credit?
Does the air waybill indicate the actual flight date?
If the date is stated in the credit, the information contained in the
air transport document under Requested Flight/Date or similar
field for flight number and flight date does not suffice as a special
note of this departure date. The date of issuance or a separately
added notation with the flight date will otherwise be considered as
the date of shipment.
H
as the shippers copy (or similar description) been submitted?
If this remains in the exporters possession, the exporter may recall
the goods or have them rerouted to a different addressee as long
as the shippers copy was not submitted to the carrier. Only when
the exporter has relinquished this document does he give up the
power of disposal over the consignment. Submission of the copy
intended for the sender is sufficient even if the credit prescribes a
full set of originals (Art. 23a v UCP).
(See Fig. 24, Air Waybill on the facing page)
60
Air Waybill (Fig. 24)
CARRIER:
Japan Airlines
PO Box, Tokyo, Japan
NIPPONEXPORT
Naniwa-KU
OSAKA 530, Japan
Elektro-Import AG
Voltastrasse 10
8000 Zrich
Switzerland
Notify: (same as consignee,

Tel. +41 44 123 45 67)
ZRH Japan Airlines
JL 614/25
NVD
XXX
NCV
Zurich, Switzerland
CHF
Tokyo, Japan
Television Sets
3,600 kgs
L/C SGAT 112-137312
FREIGHT PREPAID
120
Japan Airlines
for account of
shipper
25-Apr-08
Tokyo
Japan Airlines
61
cc) Other Transport Documents

(Non-negotiable sea waybills; multimodal transport documents;
road, rail or inland waterway transport documents; courier and
post receipts; transport documents issued by freight forwarders)
Road and rail transport documents and transport documents
issued by freight forwarders, though not documents of title, are
suitable for use in documentary credit operations. These accompanying documents are evidence of a contract of carriage
between the seller and the carrier.
As soon as the sender delivers the goods to the forwarding
agent or transport operator, he receives one of these documents, depending on the type of transport and the conditions of
the credit, which he must present to the bank together with the
other documents. This provides confirmation that the goods
have either been taken in charge for delivery or actually dispatched.
UCP Articles 19, 21, 24 and 25 regulate how these documents
must be issued if the credit itself does not contain other stipulations.
The checklist for the Multimodal Transport Document appears
on page 64 and an example of it on page 65, Fig. 26
CHECKLIST
Other Transport Documents, General
If the credit stipulates these types of documents, have these
been duly stamped and/or signed?
Do these documents relate to the same delivery or service as
the other documents?
Are the marks, weights, etc. consistent with those indicated
in the other documents?
Are the name and address of the consignee correct?
Are the places of departure and destination in agreement
with the terms of the credit?
Do statements concerning the payment of freight conform to
the delivery terms?
Do the documents contain all the information called for in the
credit?
(See Fig. 27, CMR International Waybill on page 67)
CHECKLIST
Rail Consignment Note (Rail Transport, Art. 24 UCP)
Is the document the genuine duplicate or just a copy?
Does the document carry the stamp of the station of departure?
(See Fig. 25, Rail Consignment Note on the facing page)
CHECKLIST Courier and Post Receipt (Art. 25 UCP)

Have the receipts been stamped, signed or otherwise authenticated by the named courier?
Have
the receipts or certificates of posting been stamped or

otherwise authenticated?
62
Rail Consignment Note (Fig. 25)
Instrumenten AG
Wattstrasse 50
8000 Zrich
FREIGHT REPAID
Import SpA
Strada Principale 120
Napoli, ITALIA
COMMERCIAL INVOICE
MARCH 31ST, 2008

ZRICH, SWITZERLAND
Napoli
ITALIA
0187 332 3028 0
FREIGHT REPAID
XX CIP Napoli, ITALIA
15'000
40
200 HIGH TEMPERATURE COMPONENTS
ZRICH CHIASSO MILANO ROMA NAPOLI
8000 ZRICH, 31-MAR-08
63
CHECKLIST Multimodal Transport Document

(Transport document for at least two modes of transport)
Does the document indicate the name of the carrier and
has it been signed or authenticated by the carrier or a
named agent for or on behalf of the carrier, or the master
or a named agent for or on behalf of the master (Art. 19a
i UCP)?
Are the goods consigned as stipulated in the credit (i.e.
to order, to order of a named person or firm, or direct to
a named consignee without a to order notation)?

Has the document been properly endorsed (if this is
necessary)?
(Art. 14j UCP)?
Does the document indicate the taking in charge, dispatch or loading on board of the goods at the place
specified in the documentary credit?
If yes, do the forms contain wording to this effect or are they forms
on which the date of dispatch, taking in charge or loading on board
has been added after the fact by the carrier or his agent or by the
master or a named agent for or on behalf of the master (Art. 19a ii
UCP).
Art 19a iii is particularly important in this regard. The on board
note must refer to the port of dispatch and the vessel indicated
named in the credit and the document must bear the same port of
destination as that named in the credit.

Is the document marked on deck?

In this case, the goods have been loaded on the deck, which is not
permitted unless the credit contains a corresponding provision (Art.
26 UCP).
the document contain the word intended or some

similar qualification in relation to the ship and/or port of
loading and/or port of discharge?
In the case of CFR and CIF contracts, the document must bear the
words freight paid or freight prepaid; for FOB deliveries, the
required wording is freight collect.
Does the date of shipment shown in the document conform to the requirements of the credit?
The date of a shipped or on board bill of lading or the date of a
subsequently added on board stamp is regarded as the date of
shipment.

If
the credit does not prescribe a specific deadline for the

submission of the documents after the shipping date:
Will the documents be submitted within 21 days of the
shipping date, but not later than on the expiry date (Art.
14c UCP)?
Is the document clean, i.e. without any derogatory
clause referring to the condition or packing of the goods
(e.g. several bags torn, iron bands rusty, one case
defective, part of goods decayed, Art. 27 UCP)?
Have alterations on the document been properly authenticated?
stamp and the signature or initials of the carrier or a named agent
acting for or on behalf of the carrier, or of the master or a named
agent acting for or on behalf of the master.
H
as a full set of properly signed originals been submitted
(Art. 19a iv UCP)?
Does
Such qualifications are only allowed in certain circumstances (Art.

19a iii UCP).
64
A
re the markings, weights, etc. in agreement with the
details given in the other transport documents?
Do references to the payment of freight costs, if present,
freight charges shown in the document match those in
the commercial invoice?
(See Fig. 26, Multimodal Transport Document on the facing

page)
(See Fig. 27, CMR - International Waybill on page 67)
Multimodal Transport Document (Fig. 26)
Shipper
MT B/L
Instrumenten AG
Wattstrasse 50
8000 Zrich
Negotiable Multimodal Transport

Bill of Lading
issued subject to UNCTAD/ICC Rules for
Multimodal Transport Documents (ICC Publication 481).
Consigned to order of
Import Ltd
Main Road
New Delhi
India
Notify address
Import Ltd
Main Road
New Delhi
India
MV Seastar
Mumbai
Carton No. 1 120
Freight payable at
New Delhi
origin
Number / kind of
packages
Description of goods
2 Pallets each 100

cartons total
200 cartons
200 High Temperature Components
Number of Original Bs / L
three
Gross weight / Measurement
350,00 kgs
Order-No. 12345
Genova
Place of delivery
SHIPPED ON BOARD ON
MV SEASTAR IN GENOVA ON
31-MAR-08
FREIGHT PREPAID
Text authorized and document printed by Swiss Freight Forwarding and Logistics Association, 2003. Copyright reserved.
Marks and numbers
Port of loading
Port of discharge
Zurich
Ocean Vessel
Place of receipt
Declared value
according to the declaration of the merchant

For release of cargo apply to
Freight and charges
India Agency Ltd

Mumbai, India
Place and date of issue

RECEIVED in apparent good order and condition, unless otherwise noted
herein, at the place of receipt for transport and delivery as mentioned
above. One of these Multimodal Transport Bills of Lading must be surrendered duly endorsed in exchange for the goods. In witness whereof
the original Multimodal Transport Bills of Lading all of this tenor
and date have been signed in the number stated above, one of which being
accomplished the other(s) to stand void.
The goods and instructions are accepted and dealt with subject to the
Standard Conditions printed overleaf.
Zurich, 31-Mar-08
Stamp and signature
SPEDLOGSWISS LTD
As Carrier
65
CMR International Waybill (Fig. 27)

1. Blatt (wei) Tarifkontrolle
1er exemplaire (blanc) contrle tarifaire
3. Blatt (blau) Empfnger

3e exemplaire (bleu) destinataire
Diese Befrderung unterliegt trotz

einer gegenteiligen Abmachung den
Bestimmungen des berinkommens
ber den B e f rd e r u n g s v e r t r a g im
internat. Straengterverkehr (CMR).
Empfnger (Name, Anschrift, Land)

Destinataire (nom, adresse, pays)
16
Auslieferungsort des Gutes

Lieu prvu pour la livraison de la marchandise
Land/Pays
Ce transport est soumis, nonobstant

toute clause contraire, la Convention relative au contrat de transport international de marchandises
par toute (CMR).
Frachtfhrer (Name, Anschrift, Land)

Transporteur (nom, adresse, pays)
CAMION AG
8000 ZRICH
Import SpA
Strada Principale 120
Napoli, ITALIA
3
Exp.-Nr.
INTERNATIONALER
FRACHTBRIEF
LETTRE DE VOITURE
INTERNATIONAL
Instrumenten AG
Wattstrasse 50
8000 Zrich
Ort/Lieu
4. Blatt (grn) Frachtfhrer

4e exemplaire (vert) transporteur
17
Nachfolgende Frachtfhrer (Name, Anschrift, Land)

Transporteurs successifs (nom, adresse, pays)
18
Vorbehalte und Bemerkungen

Rserves et observations des transporteurs
Napoli
Italia
Ort und Tag der bernahme des Gutes

Lieu et date de la prise en charge de la marchandise
Ort/Lieu
Land/Pays
Datum/Date
8000 Zrich
Schweiz
31-Mar-08
Beigefgte Dokumente
Documents annexs
Kennzeichen und Nummern

Marques et numros
Anzahl der Packstcke

Nombre des colis
Art der Verpackung

Mode demballage
Bezeichnung des Gutes *

Nature de la marchandise *
10
2 Pallets each 100 cartons total 200 cartons

containing 200 High Temperature Components
Statistiknummer
No statistique
in kg
11 Bruttogewicht
12
Poids brut, kg
2. Blatt (rot) Absender

2e exemplaire (rouge) expditeur
Absender (Name, Anschrift, Land)

Expditeur (nom, adresse, pays)
CMR
Carton No. 1 200

Klasse
Ziffer
Buchstabe
Classe
Chiffre
Lettre
Anweisungen des Absenders (Zoll- und sonstige amtliche Behandlung)
Instructions de lexpditeur (formalits douantires et autres)
(ADR)
(ADR)
13
350,00
FREIGHT PREPAID
Order-No. 12345
Umfang in m3
Cubage m3
19
Absender
Lexpditeur
Whrung
Monnaie
Empfnger
Le Destinataire
Rckerstattung
Remboursement
Frachtzahlungsanweisungen
Prescription daffranchissement
Frei
Franco
Unfrei
Non Franco
Ausgefertigt in
Etablie
21
22
20
8000 Zrich
26
27
31. Mrz 2008
am
le
23
Instrumenten AG
Unterschrift und Stempel des Absenders

(Signature et timbre de lexpditeur)
25
Besondere Vereinbarungen
Conventions particulires
14
15
Zu zahlen vom:
A payerpar:
Fracht
Prix de transport
Ermigungen
Rductions
Zwischensumme
Solde
Zuschlge
Supplments
Nebengebhren
Frais accessoires
Sonstiges
Divers
+
Zu zahlende Gesamtsumme/Total payer
19
24
28
km
Datum
Date
Camion AG
Unterschrift und Stempel des Empfngers
(Signature et timbre du destinataire)
Unterschrift und Stempel des Frachtfhrers

(Signature et timbre du transporteur)
Angaben zur Ermittlung der Tarifentfernung

mit Grenzbergngen
von
bis
Gut empfangen
Rception des marchandises
Berechnung des Befrderungsentgelts
frachtpfl. Gewicht
in kg
Tarifstelle:
Sonderabmachung
Gterarten
National
Whrung
Frachtsatz
Befrderungsentgelt
Vertragspartner des Frachtfhrers ist kein Hilfsgewerbetreibender im Sinne des anzuwendenden Tarifs
Amtl. Kennzeichen
Nutzlast in kg
Kfz
Summe
Anhnger
Benutzte Gen.-Nr.
Auszufllen unter der Verantwortung des Absenders
A remplir sous la responsabilit de lexpditeur
1 15
einschlielich
y compris et
mit fett gedruckten Linien eingerahmten

21 + 22 Die
Rubriken mssen vom Frachtfhrer ausgefllt. werden.
Bilateral
EG
CEMT
Les parties encadres de lignes grasses

doivent tre remplies par le transporteur.
* Bei gefhrlichen Gtern ist, auer der eventuellen Bescheinigung, auf der letzten Linie der Rubrik anzugeben: die Klasse, die Ziffer sowie gegebenenfalls der Buchstabe.
* En cas de marchandises dangreuses indiquer, outre la certification ventuelle, la derniere ligne du cadre: la classe, le chiffre et le cas chant, la lettre.
67
dd) Insurance Documents

If the agreed delivery terms are CIF, it is up to the seller to take
out insurance. The insurance document (policy or certificate) is
the proof that he has done so. The amount of cover must be at
least 110% of the CIF value of the goods. (Art. 28f i + ii). The
CIF value normally comprises the net price (after deduction of
discounts) plus the costs of packing, transport and insurance.
If the CIF value cannot be assessed, the minimum amount of
the insurance cover must be 110% of the amount for which
payment, acceptance or negotiation is requested or 110% of
the gross amount of the invoice, whichever is higher (Art. 28f ii
UCP). The insurance must be issued in the currency of the
credit unless the credit states otherwise (Art. 28f I UCP).
In the UCP (Art. 28g), the parties to the credit are urged to give
explicit descriptions of the risks to be insured against and to
avoid imprecise formulations such as usual risks or commercial risks.
If the risks to be covered are not precisely stipulated in the
credit, the bank will accept insurance documents as presented,
without responsibility for any risks not covered (Art. 28g UCP).
The insurance document must show that the risks are covered
at least between the place of dispatch stated in the credit and
the destination (Art. 28f iii).
CHECKLIST Insurance Documents

Is the insurance document of the right type?
The terms of the credit will stipulate whether the exporter must
present an insurance policy or insurance certificate. Brokers cover
notes which are sometimes headed insurance certificate will
not be accepted by the bank unless expressly permitted in the
credit (Art. 28a, c and d UCP).
Has the insurance document been issued by the insurance company, an underwriter or an agent or proxy of
the insurance company or an underwriter (UCP, Art.
28a)?
If the insurance certificate has been signed by an agent
or proxy, does it specifically state that the agent or proxy
has signed for and on behalf of the insurance company
or an underwriter?
Is the document endorsed on the reverse (if necessary)?
Are the description of goods, the marks, the transport
route and the name of the vessel in agreement with the
details given in the transport documents and commercial
invoice?
Is the sum insured expressed in the same currency as
the credit and is it at least equal to the required minimum
amount (Art. 28f i UCP)?
Are all the risks specified in the credit included word for
word in the insurance document (Art. 28g and h UCP)?
Do the presented documents constitute a full set (Art.
28b UCP)?
Is the date of issue the same as or earlier than the date
of the transport document?
A later date of issue is acceptable only if the document expressly
states that cover was effective from the date of shipment (Art. 28e
UCP).
If the goods have been loaded on deck, does the insurance cover on deck risks?
This transport method must be expressly permitted in the documentary credit (Art. 26a UCP).
(See Fig. 28, Insurance Certificate on the facing page)
68
Insurance Certificate (Fig. 28)
CH-8001 Zurich
P.O. Box 22
Telephone +41 (0)44 723 01 77
Telefax +41 (0)44 723 01 74
info@inincompany.com
International Insurance
Company
Policy No.
CH00002972MA
Insurance Certificate
(Insurance Policy)
Certificate issued in 1 originals

and 2 copies.
Assured:
W e herewith certify having insured the goods

Designated hereafter for the transportation
from
Kobe, Japan
to
Hamburg, Germany
Conveyance
MV Seastar on 25-Apr-08
Elektro-Import AG
Voltastrasse 10
CH-8000 Zurich
Switzerland
Marks, numbers, goods and manner of packing:
Elektro-Import BC 2000 Made in Japan C1-120

Television-Sets
120 Cardboard boxes
USD 33,000.
in letters:
US-Dollars thirty three thousand/00
Amount insured:
Scope of insurance
In the event of loss or damage:
3.
4.
5.
5.1.
5.2.
5.3.
5.4.
5.5.
5.6.
5.7.
Surveyor:
Any loss or damage must be ascertained immediately by the surveyor.

Claims shall be settled by the head office of XL Winterthur International
Insurance Switzerland.
Claims will be paid subject to surrendering of one negotiable original of this
certificate, the remaining originals, if any, thereby becoming void.
Place of jurisdiction is Winterthur or the Swiss domicile of the plaintiff.
The following documents are to be submitted in support of any claim:
Negotiable original of the Insurance Certificate or policy
Commercial invoice and packing list
Original Bill of Lading and/or other original documents relating to the conveyance
Original Survey Report issued by the surveyor
Letter of protest against the carriers and respective replies
Claim statement
Any other document or correspondence in respect of the transport in question
Zurich, April 20, 2008
1.
2.
COVERING 'ALL RISKS', INCL. RISKS OF WAR, STRIKES, RIOTS AND CIVIL COMMOTIONS
International Insurance Company
69
ee) Commercial Invoice

The commercial invoice is the accounting document which
shows the sum of money due to the exporter from the
importer.
From time to time the beneficiary is required to present a consular invoice. This is an invoice authenticated by the consulate
of the importers country, confirming that the invoice amount
represents the actual value of the goods. A consular invoice
facilitates customs clearance in the importers country.
CHECKLIST Commercial Invoice

Has the invoice been made out by the beneficiary and
unless otherwise stipulated in the credit is it addressed
to the applicant for the credit (Art. 18a UCP)?
Is the commercial invoice made out in the currency of the
credit (Art. 18a iii UCP)?
Has the invoice been signed, authenticated by a notary
public or a chamber of commerce and/or legalized by a
consulate, if so stipulated in the credit?
Are the description of the goods, their value and the unit
price exactly as stipulated in the credit (Art. 18c UCP)?
The description of the goods must not contain specifications such
as used, as new, reconditioned, etc., unless these are expressly allowed by the terms of the credit.
D
oes the information regarding the number of packages, shipping marks, quantity of goods, weights, etc.
agree with the details given in the transport and other
documents?
Is the invoice amount no higher than the credit amount
or, in the case of part-shipments, no higher than the
outstanding portion of the credit?
This applies only where the credit covers 100% of the value of the
goods.
In the case of part-shipments, does the invoice amount

correspond proportionally to the dispatched quantity?
This applies only to deliveries comprising a single type of goods.
D
o the terms of delivery (ex-works, FOB, CFR, etc.)
agree with the terms of the credit?
Is the invoice correct arithmetically (insofar as the prices
have been specified)?
(See Fig. 29, Commercial Invoice on the facing page)
70
CHECKLIST Consular Invoice

Has the consular invoice been issued on the official form and
been duly authenticated by the consulate?
Do the marks, number of items, quantity of goods, weight,
import license number, etc. agree exactly with the details
given in the commercial invoice and the transport document?
Do the FOB, CFR or CIF values agree exactly with those
given in the commercial invoice?
Does the name of the vessel agree with that stated in the bill
of lading?
Commercial Invoice (Fig. 29)
Nipponexport
INVOICE
Naniwa-Ku
Osaka 530, Japan
DATE:
INVOICE #
FOR:
April 25th, 2008

100
TV-Sets
Bill To:
Elektro-Import AG
Voltastrasse 10
8000 Zurich
Switzerland
Covering Television Sets
Shipped per MV Seastar on 25-Apr-08 from Kobe to Hamburg
freight prepaid, insurance to be covered by us
AMOUNT
DESCRIPTION
Quantity: 120 pcs
'Brilliant Colours 2000'
Television Sets
Unit-Price: USD 250.-/pc
CIF Hamburg
Marks + Numbers:
USD 30,000.-
BC 2000
Import
Elektro-
Made in
C1-120
Japan
as per L/C-No. SGAT 112-137312 issued by Credit Suisse Zurich dated 03-Apr-08
TOTAL
USD 30,000.-
THANK YOU FOR YOUR BUSINESS!

Nipponexport
Sales Manager
M. Komei
71
ff) Other Documents

These include, for example, certificates of origin, certificates of
quality or analysis, work progress certificates, weight lists,
weight certificates, inspection certificates and packing lists.
The UCP contain no detailed rules covering these documents.
The issuing party and the wording or information content should
therefore be precisely stipulated in the credit. Otherwise banks
will accept such documents as presented, provided their information content enables the goods and/or services referred to in
the documents to be related to those referred to in the commercial invoice or credit (Art. 14f UCP).
The growing use of documentary credits in connection with
service transactions means that work progress certificates
are now becoming increasingly important. By signing a work
progress certificate, the buyer confirms to the seller that a part
of the work has been duly completed.
These documents involve a degree of risk for the beneficiary of
the credit, since the buyer can withhold his signature and thereby
delay or even prevent payment under the credit. It is therefore
very important that the credit should contain a latest due
clause stipulating a date by which the amount owed must be
paid irrespective of the presentation or non-presentation of work
progress certificate.
The detailed checklists given above emphasize the formal rigor
that characterizes documentary credit operations. If a
single question cannot be answered satisfactorily, the Bank may
have to refuse payment. If, however, after a thorough examination of the documents, the beneficiary judges them to be in
order, he can present them to the bank. Credit Suisse provides
a special form for this purpose (See Fig. 31, Documents
Schedule on page 74).
CHECKLIST Weight List, Weight Certificate

Is the document headed weight list/weight certificate?
A weight certificate must be signed.
Does
the total weight agree with that stated in the other

documents?
Do the various partial weights add up to the total weight?
CHECKLIST Inspection Certificate

Is the document headed inspection certificate?
Do the details in the certificate agree with the terms of the
credit?
Has the certificate been signed?
These points also apply to certificates of quality and manufacturers test
certificates.
CHECKLIST Packing List

Is the document headed packing list?
Does the list contain all the necessary information, especially
concerning the packing units?
CHECKLIST Certificate of Analysis

Does the analysis agree exactly with the terms of the credit
and the information contained in the other documents?
Does the analysis refer to the same goods as the commercial
invoice?
Has the certificate been issued and signed by the authorities
stipulated in the credit?
CHECKLIST Certificate of Origin

Does the origin of the goods as stated in the certificate
agree with the terms of the credit?
Is the applicant for the credit designated as the consignee?
Has the certificate been signed?
Has the certificate been authenticated and/or legalized
by the stipulated authorities?
(See Fig. 30, Certificate of Origin on the facing page)
72
Certificate of Origin (Fig. 30)
Exporteur
Exportateur
Esportatore
Exporter
Empfnger
Destinataire
Destinatario
Consignee
Nr.
No.
Instrumenten AG
Wattstrasse 50
8000 Zurich
Switzerland
URSPRUNGSZEUGNIS
CERTIFICAT DORIGINE
CERTIFICATO DORIGINE
CERTIFICATE OF ORIGIN
The India Commercial Co. Ltd.

Central Road
Mumbai
INDIA
SCHWEIZERISCHE EIDGENOSSENSCHAFT
CONFDRATION SUISSE
CONFEDERAZIONE SVIZZERA
SWISS CONFEDERATION
Ursprungsstaat
Pays dorigine
Paese dorigine
Country of origin
Bemerkungen
Observations
Osservazioni
Observations
Angaben ber die Befrderung (Ausfllung freigestellt)

Informations relatives au transport (mention facultative)
Informazioni riguardanti il trasporto (indicazione facoltativa)
Particulars of transport (optional declaration)
by airfreight from Zurich to Mumbai
as per invoice no. 1234
220 kg
Bruttogewicht
Poids brut
Peso lordo
Gross weight
240 kg
Nettogewicht
Poids net
Peso netto
Net weight
kg. l, m3
etc./ecc
DESCRIPTION OF GOODS:
20 pcs. IAG Measuring Instruments
as per Proforma-Invoice-No. PI1234
Zeichen, Nummern, Anzahl und Art der Packstcke; Warenbezeichnung

Marques, numros, nombre et nature des colis; dsignation des marchandises
Marche, numen, numero e natura dei colli; designazione delle merci
Marks, numbers, number and kind of packages; description of the goods
SHIPPING MARKS:
India Commercial Co. Ltd.
Measuring Instruments
Invoice-No. 1234
HANDLE WITH CARE
L/C-No. BOM-9876
C1-20
SWITZERLAND
Die unterzeichnete Handelskammer bescheinigt den Ursprung oben bezeichneter Ware

La Chambre de commerce soussigne certifie longine des marchandises dsigns ci-dessus
La sottoscritta Camera di commercio certifica lorigine delle merci summenzionate
The unsdersigned Chamber of commerce certifies the origin of the above mentioned goods
Zrich, February 28th, 2008
Zrcher Handelskammer
Chambre de Commerce de Zrich
Camera di Commercio di Zurigo
Zrich Chamber of Commerce
73
Documents Schedule (Fig. 31)
reset data
Absender / Expditeur / Mittente / Sender:
Instrumenten AG
Wattstrasse 50
8000 Zrich
CREDIT SUISSE
Trade Finance Service Center Zrich
Giesshuebelstrasse 30
P.O. Box
CH-8070 Zrich
Ort und Datum / Lieu et date / Luogo e data / Place and date
Zrich, 25.5.2008
Ref. / Rif :
AB-0678
Erffnende Bank / Ouvert par / Aperto da / Opening Bank:
Commercial Bank
Hong Kong
SGAT 112-135742 / C-123-45
Akkr. / LC-No.:
Als Beilage bergeben wir Ihnen die

folgenden Dokumente zur
teilweisen
restlichen
vollstndigen Bentzung obigen

Akkreditives:
Nous vous remettons en annexe les

documents suivants pour lutilisation
partielle
restante
complte de laccrditif
susmentionn:
Vi rimettiamo in annesso i seguenti

documenti per lutilizzo
parziale
rimanente
completo dellaccreditivo
summenzionato:
Enclosed we send to you the

following documents for
partial
the remaining
the complete utillisation of the

above mentioned letter of credit:
Wechsel/
Quittung
Faktura
Konsul.Faktura
Urspr.Zeugnis
Vers.-Pol.
od. Zert
Konnossement
Luftfr.brief
Dupl
Frachtbr.
Sped.Besch.
PostQuittung
Packliste
GewichtNota
Kreditbrief
Effet/
Quittance
Facture
Facture
consul.
Certificat
dorigine
Pol./Cert.
dassur
Connaissement
Lettre de
tr. arien
Lettre de
voiture
Rcp.
dexpd.
Rcep.
postal
Liste de
colisage
Note de
poids
Lettre de
crdit
Effetto/
Ricevuta
Fattura
Fattura
consolare
Certific.
dorigine
Pol./Cert.
dassicur.
Polizza
di carico
Lett. di
tr. aereo
Dupl.lett. di
vettura
Ricev. d.
sped.
Ricevuta
postale
Distinta
dimball.
Nota pesi
Lettera
di credito
Draft /
Receipt
Invoice
Consular
Invoice
Certificate
of origin
Insurance
policy or
Certificate
Bill of
lading
Air
waybill
Duplicate of
railway bill
Forwarder's
receipt
Postal
receipt
Packing
list
Weight
certificate
Letter of
credit
ber folgende Warensendung / concernant lenvoi de la marchandise suivante /

riguardante il seguente invio di merci / of the following consignment of goods:
200 high temparature components
Der uns zustehende Betrag von / La somme de / Limporto dovutoci di / the amount of
CHF 45,000.
unserem Konto Nr. gutzuschreiben / crdite sur notre compte No. /
da accreditare sul nostro conto no. / is to be credited to our account No.
ist / qui nous est due doit tre / / entitled to us
-200 100-01
zu berweisen an / vire / da versare a / is to be be transferred to

zugunsten Konto Nr. / sur le compte No. /
in favore del nostro no. /in favour of account No.
Bemerkungen / Remarques / Osservazioni / Remarks:
Unterschrift / Signature / Firma
To be completed by the Bank

CIF-Nr.
74
Productcode: 00011
5.3 Discrepancies in the Documents
5.4 Settlement
If the bank decides to refuse documents because it has found

them to be irregular, it must inform the beneficiary of this decision within a reasonable time (defined in Art. 16c UCP as five
banking days following the day of receipt of the documents). It
will then sometimes be possible for the beneficiary to rectify the
documents or get them corrected and to resubmit them before
the credit expires. The credit does not automatically become
void if the documents are rejected by the Bank.
A correspondent bank that has confirmed a documentary credit

will honor the documents once it has examined them and found
them to be in order. If the credit is unconfirmed, the correspondent bank that advised it is not bound to honor the documents, but, in the interests of the client, it will usually do so.
In most cases an alternative solution is sought, because outright

rejection would run counter not only to the economic interests
of the beneficiary but also to those of the buyer. In practice, one
of the following three procedures is adopted:
1. The correspondent bank notifies the issuing bank of the discrepancies by SWIFT and requests authority to effect payment despite them or
2. The correspondent bank suggests to the beneficiary that the
documents be sent to the issuing bank for approval. In this
way, the buyer will gain possession of the documents only
against payment of the value of the goods.
3. The correspondent bank may though it is under no obligation to do so honor the documents under reserve. If the
buyer or issuing bank then refuses to make payment against
the documents because of the discrepancies, the beneficiary
must refund the amount (plus commissions, expenses and
interest) to the bank. The reserve is lifted, i.e. payment becomes definitive, once the buyer or issuing bank has received the documents and expressly or tacitly accepted them
(tacitly in this context means without immediate objection).
If the issuing bank decides to refuse documents presented to it
by the correspondent bank on the grounds that they contain
discrepancies, the refusal will not be regarded as valid unless
the following conditions are met (Art. 16c and d UCP ):
Notice of refusal must be given without delay and no later
than the close of the fifth banking day following the day of
receipt of the documents.
A rapid means of communication must be used.
The notice must state all the discrepancies and indicate
which of the four options detailed in Article 16c has been
selected with regard to fate of the documents.
Depending an the agreed method of settlement, the correspondent will either pay out the credit amount, give an undertaking to pay at a later date (in the case of a deferred payment
credit), accept a bill of exchange or negotiate, i.e. give value in
exchange for the documents. In the first case the beneficiary
obtains an immediate cash payment. If the transaction involves
an undertaking to pay at a later date, the beneficiarys bank may
be prepared to grant him an advance on the strength of this
undertaking if he so wishes. If the credit is available by acceptance, he can either wait for the accepted bill of exchange to
mature or else convert it into cash by discounting it at his
bank.
lf the credit is available by negotiation, the beneficiary will receive
a cash payment. However, a reduction will be made from this
payment to allow for the expected time for the transmission of
the documents to the issuing bank and the transfer of the cover
to the corresponding bank. Depending on the form the credit
takes, the beneficiary may receive an undertaking to provide
advance payment from the bank.
The correspondent bank forwards the documents to the issuing
bank and requests reimbursement, either immediately or at a
later date depending on the terms of the credit. If the transaction
is conducted in the local currency of the correspondent bank,
this bank can debit the amount to the issuing banks account
(for example, foreign banks hold their Swiss franc balances with
Swiss banks). If the amount is expressed in the currency of the
issuing banks country, the issuing bank will credit the account
of the correspondent bank. In the case of a documentary credit
issued in a currency other than that of the issuing or correspondent bank, settlement is not quite so simple. The issuing
bank could authorize a bank in the respective currency area to
credit or transfer the owed amount on demand to the correspondent bank (reimbursement). The duties and responsibilities
of all banks involved are set out in International Chamber of
Commerce Publication No. 725 ICC Uniform Rules Bank-toBank Reimbursements under Documentary Credits. These
rules are not reproduced in this brochure.
The issuing bank checks the documents to ensure that they
meet the requirements of the credit. If they are in order, they will
be released to the buyer against payment of the amount due,
either immediately or at a later date depending on the terms. On
the strength of the documents, the buyer can now take possession of the goods and proceed with the import formalities.
75
6. Supplement to UCP 600 for Electronic Presentation

The supplement Version 1.1 in force since July 1, 2007, consists of 12 articles which are all headed by the article number
prefixed by the letter e to distinguish them from the numbered
articles of UCP 600.
It aims to allow beneficiaries to present documents in electronic
or paper form, provided that the documentary credit does not
stipulate otherwise.
Although there is no established practice as yet with respect to
electronic documents, a framework has been set up which will
make it possible for the beneficiary to present documents in an
electronic form and for the banks to check these documents,
irrespective of systems or technologies.
In particular, the rules had to define how terms such as on their
face and sign, which are completely clear in the paper world,
should and must be interpreted for the electronic world.
In this respect, particular care must be taken to ensure that
every documentary credit defines the format of the electronic
document to be presented. Otherwise, it would be possible to
present the document in any format (e4). The bank is not
allowed to refuse documents on the grounds that it cannot read
and examine them (e6c). Therefore, important to know whether
the bank can examine a particular format before issuing or
advising. Agreeing to issue or advise a documentary credit
without defining a format would therefore entail incalculable
risk.
76
Another important provision states that every principal must take

due note of the fact that any electronic document presented to
the bank must identify the documentary credit under which it is
presented. This identification may be provided in a header or in
the document itself (e5d i).
The beneficiary of the documentary credit must notify the bank
at which the documents are to be presented when the presentation is complete. Until this notification arrives, the bank must not
take any action, and the documents, which nearly always come
from different parties and at different times, will not be considered as presented.
The banks involved must particularly ensure that the beneficiary
is provided with two addresses in the documentary credit for the
presentation of electronic and paper documents. An address for
the presentation of electronic documents (e.g. cs@tfsczrh.ch)
and an address for the presentation of paper documents (usual
street address and town) must be supplied (e5a).
Electronic documents may also contain a hyperlink to an external
system. The principal must ensure that the link to such an
external system allows access for checking. If access is not
available, the document is considered non-compliant with the
conditions of the documentary credit.
These are the most important provisions. It remains to be seen
whether, in practice, electronic documents will soon account for
a large proportion of presentations. Until a large number of
transactions have taken place, it will not be clear whether the
regulations set down meet the needs of the markets. However,
as these regulations form an appendix to UCP 600, revised versions can be readily produced to fulfil any new requirements.
7. Costs
The main commissions charged by the banks for services rendered and risks borne are as follows:
Costs of a Documentary Credit (Fig. 32)
Unconfirmed Irrevocable Credit
Confirmed Irrevocable Credit
Issue (Issuing bank)
Handling fee plus risk premium
Advice (Correspondent bank)
Non-recurring advice commission
Confirmation (Correspondent bank)
Disbursement
Payment/negotiation commission
Payment/negotiation commission
Deferred payment
Non-recurring deferred payment

commission
Handling fee for each payment plus risk

premium for the extended commitment
period
In the absence of an agreement to the contrary, all costs are borne by the applicant (exception: negotiation credit).
If a credit is utilized only in part or not at all, commissions already charged in respect of that credit are not refunded.
There are fixed commission rates for most types of amendment.
Expenses are charged separately.

77
78

B.
81
1.
Procedures and Participants
81
2.
Basis in Law
84
3.
3.1
3.2
3.3
Establishing the Terms of Collection

Documents against Payment (D/P)
Documents against Acceptance (D/A)
Acceptance with Documents against Payment
85
85
85
85
4.
4.1
4.2
4.3
Collection Order and Transmission of Documents

Collection Order
Checking the Documents
Forwarding the Documents to the Presenting Bank
87
87
90
90
5.
Presentation of the Documents and Settlement
92
6.
Costs
92
79

B. Documentary Collections
1. Procedures and Participants
A documentary collection is a transaction in which a bank collects payment on behalf of the seller (the principal) by delivering
documents to the buyer.
Documentary collections are very suitable in cases where the
exporter is reluctant to supply the goods on an open account
basis but does not need the degree of security provided by a
documentary credit. Compared to delivery on open account, a
documentary collection offers greater security in that its purpose
is to prevent the buyer from taking possession of the goods
before either paying or accepting a bill of exchange. The banks
concerned do not enter into any commitment and are
under no obligation to pay. The exporter is relieved of a large
part of the administrative work connected with the collection
of documents and benefits from the banks worldwide network
of contacts. Thanks to the less stringent formal requirements,
this service is cheaper and more flexible than a documentary
credit.
In a documentary collection the exporter cannot be sure at the
time of dispatch of the goods that the buyer will actually pay the
amount owed. This form of settlement is therefore most appropriate in the following cases:
if the exporter has no doubt about the buyers willingness and
ability to pay (e.g. because a good business relationship
exists between the two parties);
if the political, economic and legal environment in the
importing country is considered to be stable;
if the buyers country has placed no restrictions on imports
(e.g. exchange controls) or has issued all the necessary
authorizations.
The whole process, extending from the first contact between
the importer and exporter to the completion of the transaction,
can involve many separate steps. Basically, however, a documentary collection has three stages:
Stages of a Documentary Collection (Fig. 33)

Stage 1
Establishing the terms of collection
The exporter stipulates the terms of payment in his offer or
agrees them with the buyer in the contract of sale.
Stage 2
Collection order and transmission of documents
When the order has been awarded or the contract of sale has
been signed, the exporter dispatches the goods direct to the
address of the buyer or to the presenting bank. At the same
time, he assembles all the necessary documents (invoice, bill
of lading, insurance certificate, certificate of origin, etc.) and
sends them to his own bank (the remitting bank) together
with the collection order. The remitting bank then sends the
documents, together with the necessary instructions, to the
collecting bank.
Stage 3
Presentation of documents to drawee and settlement
The presenting bank informs the buyer of the arrival of the
documents and notifies him of the terms of their release. The
buyer makes payment, or accepts the bill of exchange, and
in return receives the documents. The presenting bank then
transfers the collected amount to the remitting bank, which
credits it to the exporters account.
Participants:
There are usually four parties to a documentary collection operation:
exporter (seller, principal)
remitting bank
collecting bank (presenting bank); the term collecting
bank is applied to any bank, other than the remitting bank,
involved in the execution of the order. The term presenting
bank is used to denote the collecting bank which presents
the documents to the importer.
importer (buyer, drawee)
(See Fig. 34, Procedure for a Documentary Collection on
page 82)
81
Procedure for a Documentary Collection (Fig. 34)
Establishment of the terms of collection
Issue of the collection order
Goods
Exporter
Seller, principal
Collection order
Remitting bank
Contract
Collection order
Collecting bank
Presenting bank
Importer
Buyer, drawee
82
Presentation of the documents and payment
Payment
Payment
Payment
Advice
Documents
Goods
83
2. Basis in Law
The Swiss banks base their handling of documentary collections
on the Uniform Rules for Collections (URC) published by
the ICC in Paris. The text of the version in force since January
1, 1996, is reproduced in the Appendix.
Juridically, these rules have not yet gained the same degree of
international acceptance as the Uniform Customs and Practice
for Documentary Credits. An appropriate clause in the order
form makes the URC an integral part of the contract between
the principal and the bank.
The collection order forms used by CS contain the following
note:
This documentary collection is to be subject to the 1995 revision of the Uniform Rules for Collections issued by the ICC,
Paris, publication no. ICC 522.
84
The URC are chiefly concerned with regulating the rights and
duties of the banks and the liabilities they assume by accepting
a collection order. The remitting bank is responsible not only
under the URC but also under Art. 394 et seq. (Mandate) of
the Swiss Code of Obligations for ensuring that the exporters
instructions are transmitted to the collecting bank. It is not liable
for any errors on the part of the collecting bank. The banks
make no promise of payment, nor can they be sued for consequences arising from force majeure or delays or losses in the
transmission of information or documents, provided such delays
or losses occur through no fault of theirs.
3. Establishing the Terms of Collection

An exporter has been invited by a prospective foreign buyer to submit an offer for the supply of goods.
The terms of payment are stipulated in the offer or in the contract of sale, e.g. documents against payment, or documents
against acceptance (bill of exchange payable at 60 days after
sight).
This payment clause refers to one or other of the following
types of collection:
3.1 Documents against Payment (D/P)

The presenting bank is authorized to release the documents to
the drawee only against immediate payment. In international
usage, immediate means no later than the arrival of the
goods. If the seller (customer) does not wish to wait this long
for payment, he or she must request payment upon first presentation of documents when issuing the collection instructions. In this case, however, both the contract of sale and the
invoice must contain a clause stating that the documents are to
be presented to the drawee at the collecting bank immediately
on receipt. According to Art. 5b of URC 522, the collection
instruction should state the exact period of time within which the
drawer must take up the documents or fulfill other conditions.
Such other conditions may, for instance, take the form of a
written commitment by the importer to pay the amount owed at
maturity; the wording of this commitment must be established
by the principal.
gains possession of the goods before payment is actually

effected. By selling them immediately, he can raise the necessary funds to pay the bill of exchange. He thus obtains a period
of credit and is relieved of the need to arrange short-term
inventory financing.
Once the documents have been released, the exporters only
security is the bill of exchange accepted by the importer. While
waiting for the bill to mature, the exporter bears the risk of nonpayment. If the contract of sale has a clause to this effect, however, he may request that the importer have the bill guaranteed by the presenting bank or by another first-class bank.
Under Swiss law, a guarantee for a bill of exchange (known as
an aval) may take the form of either a signature on the face of
the bill or an explicit guarantee written on the reverse or in an
appended document. A note must be added to the signature
stating that the guarantee covers the obligation of the
drawee (under Art. 1021 SCO, it is otherwise deemed to cover
the obligation of the drawer). The guarantor becomes jointly
liable with the drawer. Thus if the drawee fails to pay the bill at
maturity, the guarantor can immediately be sued for the debt.
The seller thereby reduces his own risk and is more likely to be
able to discount the bill or in the case of medium-term maturities sell it to a forfaiter or get it accepted as security for a bank
advance.
3.3 Acceptance with Documents against Payment

3.2 Documents against Acceptance (D/A)
The presenting bank releases the documents to the drawee
against his acceptance of a bill of exchange, which is usually
payable 30180 days after sight or at a fixed future date. A
sight bill is never used in this type of collection, because
accepting such a bill would be equivalent to making a cash payment and taking receipt. Under a D/A arrangement the drawee
This third type of collection is encountered more often in the

textbooks than in practice. Orders of this type are occasionally
received from countries in the Far East. The exporter gives
instructions that the importer, on presentation of the documents,
shall accept a bill of exchange drawn at, say, 60 days after sight.
The documents may not, however, be released to the importer
until the bill has been paid. Until then the goods must be kept in
a warehouse.
85
Documentary Collection Order (Fig. 35)
clear form
Documentary Collection Order
Registered
CREDIT SUISSE
8987 Wiesenkirch, February 8, 2008

Zip C ode, Place, Date
P.O. Box 100

SGAT 112
CH-8070 Zurich
AB/cd/A-60 B
O ur Ref.
A Baumann, +41 449410001/+41 449410000

O fficer responsible, tel.: / fax:
Please find enclosed the following documents:
This documentary collection to be subjected to the "Uniform rules for collections", published by the International C hamber of C ommerce, IC C , publication 522, 1995
Drawee:
R. R. Ramirez + Cia. SAIC

14 de Mayo
1400 Buenos Aires
Argentina
bill of exchange / draft

invoices
packing / weight list
certificate of origin
insurance certificate /policy
bill of Lading (B / L )
air consignment note (AW B)
FC R / C MR / C TD / MTD
postal receipt
certificates
Drawees bank
Banco de Sta. Cruz

Florida
1000 Buenos Aires
Argentina
pyrogen tests
These documents are to be presented through the above bank to the drawee, to be released only against:
payment of
acceptance of the attached draft for: CHF
2,700.--
due
other condition(s):
(Please prescribe form and wording)
Your collection fees

for account of
C ollection fees
of correspondent
for account of
ourselves
drawee: documents may be released before fees paid.
drawee: documents may not be released until fees paid.
ourselves
drawee: documents may be released before fees
In case of difficulties the bank should contact:

Agent
A. Kumstein SA
Casilla de Correo Central 2005
1000 Buenos Aires
Fill in only if necessary
Special conditions:
protest of
non - payment
non-acceptance
no protest
guarantee issued
who is authorized to alter all of these conditions
who is not authorized to alter any of these conditions
default interest payable at
until payment.
interest may
6 % p.a.from 07.05.2008
may not
be waived
agents commission:
Please send the document
agents bank:
Instructions in the event of non-payment, non accept

and/or non-fulfilment of other requirements, or any comments:
Please see our "General Instructions"

for Argentina, dated 02.08.1992
After payment, please credit:
our Swiss francs account no.
0835-995 098-01
Hugentobler AG
Waldhsliweg 67
8987 Wiesenkirch
(foreign currencies converted at best available current exchange rate)

)
our (foreign currency) account no.

Stamp and signature
86
06.05.2008
The collecting bank is to retain tne draft for collection at maturity.
express
by courier
4. Collection Order and Transmission of Documents

Having received the purchase order or signed the contract of sale, the seller dispatches the goods. The invoice, transport document, insurance document and other documents have been prepared.
The seller is now ready to request that his bank arrange collection. The instructions he gives must be clear and complete, since the handling of the transaction by the remitting and
collecting banks will be governed solely by the instructions contained in the collection order. Where possible, the banks should
also be instructed how to proceed in the event of difficulties.
4.1 Collection Order

For the convenience of exporters, CS has prepared a special
order form for documentary collection orders (Fig. 35, Documentary Collection Order on page 86).
When making out the collection order, special attention should
be paid to the following points:
Drawees Address
In order to avoid hitches in the collection process, the full and
exact address of the buyer must be stated. Carelessness on this
point can lead to considerable problems (Art. 4c URC 522).
ion Order
Registered
Documents
The type and number of the documents should be in accordance with the laws and regulations of the importing country. If
the relevant particulars are not contained in the purchase order
or the contract of sale, the exporter should make early enquiries
at the consular office of the importing country. Should any of the
required documents be missing, taking-up of the documents by
the buyer will be prevented or delayed, and that will mean the
prevention or delay of payment. For further information on the
documents commonly used in international trade, see pages
5373.
Packing marks and numbers must be the same in all documents. Likewise, the ports of loading and discharge and the
name of the vessel must be the same in all documents.
Shipments by sea may be consigned "to order". The fact that
a marine bill of lading is a document of title guarantees that the
goods will be released only to the bill's formally identified holder.
Problems can arise if the goods are consigned to the order of
the importer. If he fails to take up the documents and does not
endorse the bill of lading, the goods cannot be disposed of.
clear form
CREDIT SUISSE
y 8, 2008
P.O. Box 100

SGAT 112
CH-8070 Zurich
+41 449410000
Registered
CREDIT SUISSE
8987 Wiesenkirch, February 8, 2008

P.O. Box 100

SGAT 112
CH-8070 Zurich
AB/cd/A-60 B
O ur Ref.
A Baumann, +41 449410001/+41 449410000
Drawee:

14 de Mayo
1400 Buenos Aires
Argentina
Drawees bank
Banco de Sta. Cruz

Florida
1000 Buenos Aires
Argentina
ugh the above bank to the drawee, to be released only against:
CHF 2,700.--
due
06.05.2008
ft for collection at maturity.
ves
e: documents may be released before fees paid.
e: documents may not be released until fees paid.
ves
e: documents may be released before fees
e: documents may not be released until fees paid.
act:
ntral 2005
onditions
ese conditions
ccept
Special conditions:
protest of
no protest
non - payment
non-acceptance
guarantee issued
until payment.
interest may
6 % p.a.from 07.05.2008
may not
be waived
express
by courier
cted to the "Uniform rules for collections", published by the International C hamber of C ommerce, IC C , publication 522, 1995
ents:

invoices
postal receipt
certificates
pyrogen tests
Drawee:
R. R. Ramirez + C
14 de Mayo
1400 Buenos Aires
Argentina
Drawees bank
Banco de Sta. Cru

Florida
1000 Buenos Aires
Argentina
payment of
If goods are
dispatched by air, post, rail or truck directly to the
CHF 2,700.-
acceptance
attached
importers address,of the
they
willdraft
befor:handed
over to the importer due
regardless of whether or not he has honored the documents.
othermay
condition(s):
The exporter
therefore address the goods to the presenting
bank or another collecting bank. But in such cases he must
Yourprior
collection
fees
ourselves
obtain the
consent
of the bank
in question. Otherwise the
for account of
bank has no obligation to takedrawee:
delivery
of may
thenotgoods,
documents
be releasedwhich
until fees paid.
remain at
the risk
of the party dispatching the
C ollection
fees and responsibility
ourselves
of correspondent
documents may be released before fees
goods (Art.
10 ofURC 522). drawee:
for account
06.05.200

Agent
A. Kumstein SA
1000 Buenos Aires
Special conditions:
protest of
non - paymen
no protest
guarantee issued
87
until payment.
interest may
agents commission:
agents bank:
6%
may
clear form
Documentary
Order
If the collecting bank has expressly
agreed toCollection
the goods being
February
8,non2008
dispatched to its address, its8987
soleWiesenkirch,
obligation in the
event of
payment or non-acceptanceAB/cd/A-60
by the importer
is
to
give
immediate
B
notification to the remitting
bank. The warehousing, sale or
O ur Ref.
Baumann,
+41 449410001/+41
449410000
return of the goods is thenAthe
responsibility
of the exporter
or
his representative in the country of destination. In some cases
the collecting bank may offer
assistance, the resultant costs of

which are borne by the exporter.
invoices
Registered
CREDIT SUISSE
P.O. Box 100
SGAT 112
CH-8070 Zurich
Drawee:

14 de Mayo
1400 Buenos Aires
Argentina
Name and Address of Presenting
Bank

If the exporter knows the identity
the(B /importers
bank or
Drawees bank
bill ofof
Lading
L)
air consignment
notethe
(AWcollection,
B)
Banco de Sta. Cruz
wishes a particular bank to be entrusted

with
he
Florida
should give the exact name and address
of
this
bank
in
the
colpostal receipt
1000 Buenos Aires
certificates
lection order. Should the remitting
bank regard his choice as
Argentina
pyrogen tests
unsatisfactory on the basis of previous experience or because of

documents are to be presented through the above bank to the drawee, to be released only against:
restrictions in the importingThese
country,
it will contact him and sugpaymentsuitable
of
gest what it believes to be a more
alternative.
2,700.--
06.05.2008
due
In the absence of instructionsThefrom

thebank
exporter,
thedraftremitting
collecting
is to retain tne
for collection at maturity.
bank will entrust the collection to a correspondent bank of its
other condition(s):
own choice. It cannot, however,
beprescribe
madeformliable
for any errors on
(Please
and wording)
the part of the bank selected. It is merely obliged to make its
ourselves
choice with reasonable careforand
toofpass on the correct
account
drawee:instrucdocuments may be released before fees paid.
tions.
C ollection fees
of correspondent
for account of
ourselves
Type of Collection
For reasons of security, theInbanks
will release
documents
to
case of difficulties
the bankthe
should
contact:
Agentpayment only in the absence of
the buyer against immediate
Special conditions:
A. Kumstein SA
instructions to the contrary. TheyCasilla
will notdecollect
on
a
docuprotest
of
non
payment
non-acceptance
Correo Central 2005
no protest
ments against acceptance basis
collection order
1000unless
Buenosthe
Aires
guarantee issued
expressly instructs them to do so. If such an instruction is
clear form
given, the presenting bank must
ensure that the acceptance of
6 % p.a.from 07.05.2008
until payment.
whoand
is not correct.
authorized
toHowever,
alter any of these
the bill of
exchange is complete
theconditions
preDocumentary
Collection
Order
Registered
interest may
may not
be waived
CREDIT SUISSE
senting 8987
bank Wiesenkirch,
bears no responsibility
for
the genuineness of the
agents commission:
February
8, 2008
express
Zip Cthe
ode, Place,
Date
signature,
authority
of the signatory to sign or the creditP.O. Box 100
by courier
agents bank:
AB/cd/A-60
B
SGAT
112
worthiness of the acceptor.
O ur Ref.
A Baumann, +41 449410001/+41 449410000
CH-8070 Zurich
88
the "Uniform rules for collections", published by the International C hamber of C ommerce, IC C , publication 522, 1995
O fficer
responsible, tel.: / fax:
Bill of
Exchange
The exporter
must
enclose,
along
withour
the"General
commercial
docuPlease
see
Instructions"
Please find
enclosed
the following
documents:
Drawee:
for Argentina,
datedand
02.08.1992
ments, a bill of
exchange
drawn
on the buyer
payable to
bill of
exchange / draft
invoices
14 de Mayo
himself. Depending
on the After
instructions
contained
in
the
collecpayment, please credit:
1400 Buenos Aires
tion order, the certificate
presenting
bill to the
of originbank will return the accepted
Argentina
our Swiss francs account no. 0835-995 098-01
insurance
certificate
/policy
(foreign
currencies
converted
at
best
available
current
exchange
rate)
)
remitting bank for delivery to the exporter or retain it in safeDrawees bank
our accepted
(foreign currency)
no.
keeping until maturity.
Once
the
billaccount
has been
paid, the
air consignment
note (AW
B)
Banco de Sta. Stamp
Cruz
and signature
FC
R
/
C
MR
/
C
TD
/
MTD
presenting bank transfers the proceeds to the remitting bank
Florida
postal receipt
1000 Buenos Aires
and the latter
credits the sum to the exporter.
certificates

Argentina
pyrogen tests
payment of
2,700.--
due
06.05.2008

other condition(s):

for account of
C ollection fees
of correspondent
for account of
ourselves
ourselves

Agent
A. Kumstein SA
1000 Buenos Aires
Special conditions:
protest of
non - payment
non-acceptance
no protest
guarantee issued
until payment.
interest may
6 % p.a.from 07.05.2008
may not
be waived
A Baumann, +41 449410001/+41 449410000
AB/cd/A-60 B
O ur Ref.
SGAT 112
CH-8070 Zurich
A Baumann, +41 449410001/+41 449410000
Drawee:

Instruments
invoices
14 de Mayo Please find enclosed the following documents:
1400 Buenos Aires

invoices
Argentina
clear form
Drawees
bank
Banco de Sta. Cruz
Registered
Florida
CREDIT SUISSE
postal receipt
8987 Wiesenkirch, February 8, 2008 1000 Buenos Aires
certificates
for Securing Payment

Drawee:
R. R. Ramirez + Ci
14 de Mayo
1400 Buenos Aires
Argentina

packing
Commissions and Expenses (see also 6. Costs)

In the absence of instructions
to the contrary,
the remitting
bank
Documentary
Collection
Order
Drawees bank
will debit its own commissions and expenses and also those of
Banco de Sta. Cruz
the collecting
or presenting
bank to the exporter. The latter can,
Florida
Argentina
P.O.
Box
100
pyrogen tests
postal receipt
however, give instructions
that theB commissions and expenses
AB/cd/A-60
1000 Buenos Aires
SGAT 112
certificates
These documents are Otourbe
presented through the above bank to the drawee, to be released only against:
Ref.
Argentina
CH-8070
Zurich
be borne
by the buyer. If
the buyer refuses to pay them, the
pyrogen tests
A Baumann, +41 449410001/+41 449410000

clear form
presentingpayment
bank ofis stillOentitled
to
release
the
documents
to
him
fficer responsible, tel.: / fax:
2,700.-unless the
collection
order
expressly
states
that the documents due 06.05.2008
acceptance
of the
attached
for: CHF
Documentary
Collection Order
Registered
Please
finddraft
enclosed
the following documents:
payment of
Drawee:
Thereleased
collecting bank
is to retain
tne payment
draft for collection
maturity.
may not be
until
after
of atcommissions
and
CREDIT SUISSE
R.
R.
Ramirez
+
Cia.
SAIC
2,700.-06.05.2008
8987
Wiesenkirch,
February
8, 2008
acceptance
due
of the attached
draft for: CHF
invoices
expenses (Art.
21b URC 522).
other condition(s):
14 collecting
deDate
Mayo
Zip C ode,
P.O. Box 100
ThePlace,
bank is to retain tne draft for collection at maturity.
/ weight list
1400 Buenos
Aires
AB/cd/A-60
B
SGAT 112
condition(s):
Argentina
O ur Ref.other
CH-8070 Zurich
insurance
certificate
/policy
ourselves
A Baumann,
+41 449410001/+41 449410000
for account of
bank
documents
may be released before fees paid. Drawees
bill
Lading (B
/L )
ofdrawee:
drawee: documents
air consignment
note (AWmay
B) not be released until fees paid.
Banco de Sta. Cruz ourselves
FC R ourselves
/ C MR / C TD / MTD
for account
of
Florida
C ollection fees
drawee: documents may be released
before fees paid.
Please
find enclosed
the following documents:
Drawee:
clear
form
of correspondent
postal
receiptdocuments may be released before fees
drawee:
Buenos
Aires
1000
R. R. Ramirez + Cia.
for account of
bill
of
exchange
/
draft
certificates
Collection
fees
ourselves
Argentina
invoices
14 de Mayo
pyrogen tests
Registered
of
correspondent
packing
for account
of / weight list
1400 Buenos Aires
CREDIT SUISSE
These
documents are to February
be presented through
the above bank to the drawee, to be released
only
against:
certificate
ofin origin
Agent
8987
Wiesenkirch,
8, 2008
Fill
only if necessary
Argentina
Special conditions:
insurance
certificate
/policy
A. Kumstein
SA
In case Box
of difficulties
P.O.
100 the bank should contact:
payment of
Drawees
bank
bill
of
Lading
(B
/
L
)
protest of
nonSGAT
-Agent
payment
non-acceptance
Casilla
de Correo
AB/cd/A-60
B Central 2005
112
SpecialBanco
conditions:
airA.
consignment
note (AW
de Sta. Cruz
no protest
06.05.2008
ur Ref.
Kumstein
SA B)
1000 OBuenos
Aires of the attached draft for: CHF 2,700.- acceptance
dueZurich
CH-8070
Florida
The collecting
is to retain tne draft449410000
for collection
at maturity.
protest
of
non - payment
A Baumann,
+41 bank
449410001/+41
guarantee
issued
postal receipt
no protest
1000 Buenos Aires
1000
Buenos
Aires
certificates
6
default interest payable
% p.a.from 07.05.2008
at
otherallcondition(s):
who is authorized to alter
of these conditions
Argentina
guarantee
issued
pyrogen tests
(Please
prescribe form
and wording)
until payment.
Please find
following
documents:
Drawee:
who is not authorized
toenclosed
alter any the
of these
conditions
interest
may
may
not
be
waived
6%
todefault
interestonly
payable
at
R.
R.
+
Cia.
These
are to be
presented
through
the above bank to the drawee,
be released
against:
documents
who Ramirez
is authorized
to alter
all ofSAIC
these
conditions
collection fees
ourselves
agents commission:
Yourinvoices
until payment.
14 de
who Mayo
is not authorized to alter any of these conditions
for account of
drawee:
documents
may
be
released
before
fees
paid.
Please
send
the
document
express
payment of
interest may
may n
Aires
drawee: documents may not be released 1400
until feesBuenos
paid.
by courier
agents bank:
agents commission:
CHF 2,700.-06.05.2008
Argentina
due
acceptance
of
the
attached
draft
for:
C ollection
feescertificate /policy
ourselves
insurance
of correspondent
drawee: documents may be released
Draweesbefore
bank fees
agents bank:
for account of
drawee: documents may not be released Banco
until fees paid.
air consignment
note (AW B)
Instructions in the event of non-payment,
non accept
de Sta. Cruz
other
condition(s):
and/or non-fulfilment of other
or any
FC Rrequirements,
C MR / C TD
MTDcomments:
In case
of/difficulties
the/bank
should contact:
Florida
Please see our "General
postal receipt Instructions"
Instructions
in the event
of non-payment,Fill
non
1000
Buenos
Aires
Agent
in accept
only if necessary
for Argentina,
dated
02.08.1992
Special
conditions:
certificates
and/or
non-fulfilment of other requirements, or any comments:
A. Kumstein SA
Your
collection fees
ourselves
Argentina
pyrogen
tests
Please
see
our
"General
Instructions"
for
account
of
drawee:
documents
may be released before fees paid.
protest of
non - payment
non-acceptance
Argentina, dateddrawee:
02.08.1992
documents may not be released until fees paid.
nofor
protest
These documents
are to
be presented
through the above bank to the drawee, to be
released
only against:
1000
Buenos
Aires
Address in Case-of-Need
The exporter should give the name and address of a representative or agent in the country of destination who in the event
of non-payment will be able to attend to the warehousing, resale
or repatriation of the goods. The collection order should also
state whether and on which matters the presenting bank may
take instructions from the case-of-need address (e.g. concerning the alteration of terms and conditions or the disposal of
documents and goods).
Special Conditions and Instructions

Under this heading the exporter can give instructions on various
matters, such as:

whether a protest should be made in the event of non-pay098-01
Cguarantee
ollection fees
ourselves
ment orournon-acceptance.
the importer
refuses to pay or to
issued
Swiss francs account no.If 0835-995
payment
of correspondent
(foreign currencies converted
at bestof
available current exchange rate)
)
After payment, please credit: drawee: documents may be released before fees
for account of
accept the bill of exchange when the documents are pre07.05.2008
6 % drawee:
may not be released until fees paid.
p.a.fromdocuments
our (foreign currency)
account
no.
who
is of
authorized
to alter
allfor:
of these
CHF conditions
2,700.-06.05.2008
francs account no. 0835-995 098-01
our
acceptance
due Swiss
the attached
draft
until
payment.
and signature
sented, the presenting
bank
must
send
notice
of conditions
thisatStamp
to
the
currencies converted
at best
available
current exchange rate)
)
who
is not
authorized
to alter
any offorthese
In case(foreign
of difficulties
the bank
should
contact:
The collecting
bank
is to retain
tne draft
collection
maturity.
interest may
may not
be waived
exporter through the remitting bank. The bank will not instiAgent our (foreign currency) account no.
F
commission:
Special
conditions:
Stamp
and signature
other agents
condition(s):
A.
Kumstein
SA
tute a protest unless
expressly
instructed
to do so;
express
(Please
prescribe form and
wording)
protest of
non - payment
Casilla de Correo
Central
2005
courier
by
agents bank:
whether a protest should be made in the event of non-pay no protest
1000 Buenos Aires
ourselves
ment of the accepted
bill;
guarantee issued
for account
of
drawee:
documents
may not be
whether the presenting
may
permit
the
toreleased until fees paid.
Instructionsbank
in the event
of non-payment,
non
acceptdrawee
6 % p.a
C ollection
fees
ourselves
until payment.
inspect or sample
the
goods;
Please
see our "General
Instructions"
of correspondent
interest may
may not
for account
for
dated
02.08.1992
whether, in the event
of ofArgentina,
late payment,
default
interestmay
is to
drawee:
documents
not be
be released until fees paid.
agents commission:
charged;
e
b
agents bank:
whether, in the Agent
case of a transaction in a foreign currency, Special conditions:
Kumstein
SA no. 0835-995 098-01
our Swiss
francs account
A.
payment is to be credited
against
abestforward
(cur(foreign currencies
converted at
available currentcontract
exchange rate)
)
protest
of
non
payment
non-acceptance
rency hedge).
no protest
our (foreign
currency)
account no.
1000
Buenos
Aires
and/orand
non-fulfilment
of other requirements, or any comments:
Stamp
signature
guarantee issued
Bank Account
Precise instructions on
the proceeds
theconditions
collection are
who how
is not authorized
to alter any of
of these
to be paid to the exporter
will
speed
up
the
transmission
of
agents commission:
payment and prevent misunderstandings. If the proceeds are
agents bank:
payable in a foreign currency,
it is a good idea for the exporter
to open a foreign currency account. The amount can then be
Instructions
in the event
of non-payment, non accept
credited to him in the
original
currency.

dated
02.08.1992
07.05.2008
6 % p.a.from
for
Argentina,
default
interest
payable at
until payment.
interest
may
may not
After payment,
please credit:
be waived
0835-995 098-01
Please send the

document
express
(foreign
currencies converted at best available
current exchange rate)
)
by courier
Stamp and signature

dated 02.08.1992
for Argentina,
Signature
And finally dont forget to sign!

0835-995 098-01
Hugentobler AG
Waldhsliweg 67
8987 Wiesenkirch
(foreign currencies converted at best available current exchange rate)

)

Stamp and signature
89
CHECKLIST for Collection Orders

Does the order state the buyers full and exact address?
Is the type of collection (i.e. against payment or acceptance)
clearly stated?
Have all the documents required by the buyer or agreed in
the contract of sale been enclosed?
Have the documents been made out in accordance with the
laws and regulations of the importing country?
Have the documents been filled out completely and correctly?
Are the packing marks and numbers the same in all the documents?
Are the ports of loading and discharge and the name of the
vessel the same in all the documents?
Have the documents been duly signed?
Have the bill of lading, insurance document and bill of exchange been endorsed on the reverse (if necessary)?
Is it possible to state the exact name and address of the
presenting bank?
Are the commissions and expenses of the remitting bank and
the collecting bank to be charged to the buyer?
4.2 Checking the Documents

Before submitting the collection order to his bank, the exporter
must check the documents to see that they have been completed fully and correctly. The bank has no obligation to carry
out such an examination itself; its task is merely to pass on the
documents and to ensure that the collection order is properly
executed. The bank will, of course, check to ensure that all the
documents listed in the collection order have been submitted.
The exporter should pay special attention to the following
points:
Has he collated all the documents demanded by the buyer or
stipulated in the contract of sale?
Have the documents been made out in accordance with the
laws and regulations of the importing country?
Have the documents been duly signed?
Have the bill of lading, the insurance document and the bill
of exchange been endorsed on the reverse (if necessary)?
Endorsement is sufficient for transfer if the documents are made out to
order.
If so, an instruction to this effect must be given in the collection order.

Is
it possible to give the name and address of a representative or agent (case-of-need address) in the country of destination who will attend to the goods in the event of nonpayment?
If so, the presenting bank must be told whether and on which matters it
may take instructions from this representative.
Should
the bank be instructed to institute a protest in the

event of non-payment or non-acceptance?
Should a protest be made in the event of non-payment of an
accepted bill?
May the presenting bank permit the drawee to inspect or
sample the goods?
If the transaction is in a foreign currency, is payment to be
credited against a forward contract (currency hedge)?
Does the order clearly state the bank account to which the
proceeds of the collection are to be credited?
Has the order been signed?
90
See also the checklists on pages 5472
4.3 Forwarding the Documents to the Presenting Bank

The remitting bank sends the documents, together with the
necessary instructions, to a bank in the buyers country. In most
cases, this bank presents the documents directly to the buyer.
Under some circumstances, it will entrust another bank with the
presentation. As already mentioned, the collecting bank which
presents the documents to the buyer is known as the presenting
bank.
Advice of Documents Received for Collection/Acceptance (Fig. 36)
CREDIT SUISSE
P.O. Box 100
CH-8070 Zurich

Tel.
Telefax
Telex
SWIFT
+41 (0)44 333 11 11

+41 (0)44 332 29 40
812412 CS CH
CRESCHZZ80A
Registered letter

Hans Keller
Hugentobler AG
Waldhsliweg 67
8987 Wiesenkirch
January 16, 2008
+41 44 332 88 56
E
M
Documents
Insurance contract/
certificate
Bill of lading (BL)
1st mail
2

3/3
2nd mail
Collection amount
CHF 12,318.
Commission
CHF
200.
Fees
CHF
75.
-----------------
Total
CHF 12,593.
----------------Drawer
Zenga SpA
Rimini, Italien

Due date:
At sight

2nd mail
Documents
1st mail
Invoice
3

Packing list
3
SGAT 112-137542
Our reference:

Dear Sir or Madam,
We are pleased to inform you that we have received the above item for collection. Please find enclosed
copy of the relative documents.
We shall send you the original documents after receipt of your authorization for payment by tested e-mail.
In case of refusal, please inform us immediately giving your reasons, so that we may advise our correspondent accordingly.
Our commission and charges may be waived.
The execution of this order is subject to ICC URC 522.
Yours sincerely,
CREDIT SUISSE
91
5. Presentation of the Documents and Settlement

The presenting bank has informed the buyer of the arrival of the documents.
The advice from the presenting bank is accompanied by photocopies of the documents. These provide the buyer with the
essential facts about the goods that have been sent and tell him
whether the documents received by the bank will enable him to
take delivery of the goods and clear them through customs (see
Fig. 36, Advice of Documents Received for Collection/Acceptance on page 91).
The buyer may, if he wishes, go to the banks offices and
examine the papers. The bank is not, however, allowed to let
him inspect the goods at the place of destination without express
authorization from the exporter.
In a documents against payment transaction, the presenting
bank forwards the proceeds of the collection to the remitting
bank immediately after payment has been received from the
buyer. However, in countries without freely convertible currencies, difficulties can arise if the buyer does not have the required
amount of foreign exchange at his disposal. In response to the
demands of both importers and exporters, it has now become
customary to release the documents to the buyer against
the deposit of an equivalent amount of local currency
together with an exchange risk guarantee. In this way, the
buyer can take immediate possession of the goods even if the
necessary foreign currency is not available at the time.
However, permission for this course of action must be expressly

stated in the collection order since the transfer risk remains with
the exporter (Art. 17 and Art. 18 URC 522).
The presenting bank forwards the proceeds to the remitting
bank as soon as the required foreign exchange becomes available. Any differences caused by exchange rate movements
have to be made good by the buyer.
In a documents against acceptance transaction, the accepted
bill of exchange either remains with the collecting bank or is
returned to the remitting bank, depending on the instructions
given by the exporter. In the latter case, the remitting bank
delivers the bill to the exporter, who can either discount it or have
it collected at maturity. In the case of medium-term maturities, it
may be the possible to sell the bill to a forfaiter or using it as
security for a bank advance.
The documentary collection has now fulfilled its purpose; the
buyer has used the documents to take possession of the goods
and the seller has received his money.
6. Costs
The remitting bank and the collecting bank charge commissions
and expenses for handling the collection. The main charges
are:
Commission for the delivery of the documents against acceptance or payment
Commission for the collection of the accepted bill
Commission for the release of goods addressed to the bank
or addressed to a forwarding agent and to be held to the
banks order
92
Depending on the circumstances, the transaction may also

involve further charges and expenses, e.g. for the extension of
bills of exchange, advice of fate, return of documents, protest,
etc., plus postage and other expenses.
Costs are low and the client obtains good value for money. The
bank places at his disposal not only the services of its own experienced specialists but also a worldwide network of contacts,
which ensures that payments, documents and information are
transmitted safely and reliably even in exceptional situations.
3. Case Study and Countertrade

A.
Case Study: Security of Performance Combined with Security of Payment
95
B.
Countertrade
96
1.
Introduction
96
2.
Compensation Transactions
97
3.
Parallel Transactions
101
4.
Features of Countertrade Transactions
101
93
3. Case Study and Countertrade

A. C
ase Study: Security of Performance Combined with Security of
Payment
A single mechanism is often unable to satisfy the security
needs of one party without prejudicing the interests of the
other. The best solution in this situation is to construct a balanced safety net of payment-securing and performancesecuring instruments. The exporter can then dispatch the goods
in the certainty that he will be paid promptly, and the importer
can make payment in the certainty that the goods will be duly
delivered.
Case Study
The following example illustrates the basic features of an
arrangement of this type. For the sake of simplicity, it is assumed
that the foreign buyer will recognize guarantees issued by an
internationally active Swiss bank.
A consortium in an African country invites tenders for the delivery
and installation of textile machines. It requires each tenderer to
furnish a tender bond for 2% of the tender amount. Moreover,
the award of the contract is conditional on the provision of a
performance bond for 10% of the contract value.
1. A Swiss textile machine manufacturer prepares a tender,
taking into account the cost of the required guarantees. In his
tender, he stipulates that settlement is to be by an irrevocable
documentary credit confirmed by a Swiss bank. He also
specifies the following terms of payment:
Advance payment 10%
Part-payment of 60% after dispatch of the machine
Final payment of the outstanding balance after an acceptance test by an independent firm of inspectors
The manufacturer requests his bank to issue the required tender
bonds and sends it, together with the tender, to the purchasing
consortium.
2. The Swiss company is awarded the order and signs the contract.
The buyer requests his bank to issue an irrevocable documentary credit to be confirmed by a Swiss correspondent. The credit
contains the following provisions regarding guarantees:
The credit is to become operative when the importer confirms
to the issuing bank that he has received the required performance bond.
The advance payment of 10% may not be made until the
correspondent bank is in possession of the stipulated payment guarantee.
3. The exporters bank issues the performance bond. The documentary credit becomes operative as soon as the Swiss correspondent bank receives notification to this effect from the
issuing bank.
The tender bond, having fulfilled its purpose, becomes void.
The exporters bank, acting on the exporters instructions, issues
an advance payment guarantee for 10% of the credit amount in
favor of the importer and sends the guarantee to the correspondent bank. The latter pays the exporter the amount of the
advance payment.
4. Against the presentation of the required documents evidencing dispatch of the machines, the exporter receives the
agreed part-payment under the documentary credit.
5. The machines are installed and have passed the acceptance
test. The exporter receives payment of the remaining 30%
of the documentary credit amount.
The advance payment guarantee lapses, while the performance
bond remains effective until its expiry date or until the end of the
guarantee period specified in the contract of sale.
95
B. Countertrade
1. Introduction
Countertrade transactions have fallen out of fashion in recent
years or the economic situation no longer requires them. For
example, the improving balance of payments and foreign currency positions in many countries have resulted in fewer solvency and liquidity problems. As it is impossible to predict
whether this situation will change, these transactions are nevertheless described here for the sake of completeness.
In this connection, transactions are generally referred to as
countertrades. Countertrades exist in many forms, and the
definitions for the specific types of transaction vary from country
to country, leading to confusion over the terminology. Even
within Europe, there is no consensus about the definitions of
many commonly used terms in this field.
In this chapter we shall present two types of operation, which we
refer to as compensation transactions and parallel transactions. Both involve placing a monetary value on the goods
involved. This distinguishes them from straightforward barter, in
which an exchange of goods takes place without stipulation of
a monetary value.
96
There is virtually no limit to the kinds of merchandise that can be

imported and exported on a countertrade basis. Countries with
weak foreign exchange positions offer a very wide range of
goods, e.g. crude oil, steel products, agricultural products
(coffee, wheat), fishery products even jute bags. The goods
that flow in the other direction are even more varied: machinery,
semi-finished steel products, coal, spectacle lenses, roughterrain vehicles, fertilizers, pesticides, fully installed automatic
telephone exchanges, and many more.
The following examples from practice illustrate how Credit
Suisses range of services can help exporters, importers and
foreign banks to solve the technical problems involved in a countertrade transaction.
Banks involvement in this field rests on the fact that a monetary
value is assigned to the goods and services being traded, even
if no money actually changes hands. The reciprocal movement
of goods and services is reflected in book entries in a special
account: an escrow account in a compensation transaction
and an evidence account in a parallel deal.
2. Compensation Transactions
Compensation transactions are an arrangement whereby the
value of imported goods is offset against the value of exported
goods. In the case of full compensation, the values of the
goods involved are fully offset against each other. But it is also
possible to arrange partial compensation, under which the
exporter receives payment for part of the goods in cash.
Fig. 37, page 98, traces the possible course of a compensation
transaction, using the following example:
Stage 1:
Texmas AG, a Swiss exporter, and Masimp Ltd, an importer in a
financially weak country, sign a contract for the delivery of
goods. Texmas AG is prepared to make delivery only against full
payment in advance or against an irrevocable, confirmed documentary credit. However, it is not possible for a bank in Masimps
country to issue a documentary credit because there is no
foreign exchange available. Moreover, no bank in Switzerland
would be prepared to add its confirmation to a credit issued by
a bank in Masimps country. Masimp Ltd therefore proposes that
payment should be made in the form of goods delivered by its
compatriot firm, Agrex Ltd.
A Swiss importer, Foodimp AG, is prepared to buy from Agrex
Ltd.
Stage 2:
Foodimp AG has a documentary credit issued in favor of Agrex
Ltd. A credit is then issued by Masimp Ltd in favor of Texmas
AG.
Stage 3:
Agrex Ltd dispatches the goods, and the documents are presented to Credit Suisse via the bank in Agrexs country. Credit
Suisse debits Foodimps account and credits the amount to the
escrow account. On the basis of the cover in the escrow account,
Credit Suisse is now in a position to confirm Masimps credit in
favor of Texmas AG. The bank in the other country credits the
amount to the exporter, Agrex Ltd.
Stage 4:
Texmas AG in Switzerland dispatches the goods and presents
the documents to Credit Suisse, which then debits the escrow
account and credits the amount to Texmas AGs account. The
bank in the other country debits the amount to Masimp Ltd on
the basis of the documents received from Credit Suisse.
Obviously, the agreement will stipulate that the amount in the
escrow account will be paid to the other country if Texmas AG
does not deliver the goods within the stipulated period and thus
does not avail itself of the documentary credit.
The banks enlisted by the importers in the two countries make

an agreement under which the amount payable by Foodimp AG
in Switzerland is to be credited to an escrow account at Credit
Suisse.
97
Procedure for a Compensation Transaction (Fig. 37)
Stage 1
Stage 2
Stage 3
Stage 4
Advice
Confirmation of credit
on basis of funds
in escrow account
Exporter
Seller
Texmas AG
Documents
Goods
Payment
Goods
Importer
Buyer
Foodimp AG
Credit Suisse
(Issuing and
correspondent bank)
Contracts
Bank in other country

(Issuing and
correspondent bank)
Exporter
Seller
Agrex Ltd.
Application for
documentary credit
Notification
of issue
Documents
Notification
of issue
Application
for documentary credit
Documents
Payment
Escrow
Account
Documents
Escrow
Account
Agreement
Advice/
confirmation
Goods
Documents
Payment
Payment
Documents
Importer
Buyer
Masimp Ltd.
98
Goods
3. Parallel Transactions
The procedure for a parallel transaction is basically the same as
for a transaction using an escrow account. The main difference
is that in this case the Swiss company Foodimp AG does not
necessarily have to be the first to take delivery and make payment. Usually each party is free to deliver or receive goods as
soon as it is ready to do so. For the purpose of the transaction
both parties are granted an overdraft facility which represents
the maximum permissible difference between the accumulated
value of completed deliveries in either direction. In an arrangement covered by a framework agreement, which usually has a
duration of one year and a maximum amount of USD 1030
million, the overdraft facility is typically USD 13 million.
The amount of the overdraft facility depends on the expected

value of the individual deliveries. As each delivery is made, Credit
Suisse and the bank in the other country will credit or debit the
corresponding amount to an evidence account without any
movement of money between Switzerland and the other
country.
After expiry of the framework agreement, the remaining balance
on the evidence account will be transferred in foreign currency
to whichever country has delivered more goods.
4. Features of Countertrade Transactions

There is no room here to discuss all the problems that can occur
in connection with countertrade operations. The most obvious
causes of difficulty include product quality, delivery times and
unpredictable weather conditions (e.g. delivery dates not being
kept because rivers become unnavigable due to freezing, etc.).
Any company contemplating a countertrade transaction must be
very careful about the pricing of the goods involved. Sudden
changes in the other countrys offer at a late stage in the negotiations (when the Swiss exporter is already virtually committed to
the transaction) can mean that the Swiss company is forced to
take countertrade goods at excessive prices and with stiff penalty clauses in the event of rejection. This is tantamount to subsidizing the other countrys products, and the ultimate result is
an erosion of profit margins.
Our Trade and Export Finance department has experience in this
field and can provide creative tailor-made solutions to the problems that arise. Companies are well advised to avail themselves
of the banks services at an early stage in the negotiation of a
countertrade transaction.
101
102
4. Appendix
List of terms
119
Index
126
List of Figures
128
Bibliography
129
List of Terms
Technical terms in English, German, French, Italian and Spanish
English
German
French
Italian
Spanish
A
about
acceptance
accessory
act of God
advance (money on)
advance payment guarantee
circa
Akzept/Akzeptierung
akzessorisch
hhere Gewalt
bevorschussen
Anzahlungsgarantie
Avisierung/Avis
avisieren
Luftfrachtbrief
circa
accettazione
accessorio
forza maggiore
concedere un anticipo
garanzia per la restituzione di
pagamenti anticipati
avviso
avvisare
lettera di trasporto aereo
aproximadamente
aceptacin
accesorio
fuerza mayor
anticipar
garanta de pago a cuenta
advice
advise
air consignment note
environ
acceptation
accessoire(ment)
force majeure
avancer (de largent)
garantie de restitution
dacompte
avis
aviser
lettre de transport arien
air freight
air mail
air waybill
Luftfracht
Luftpost
Luftfrachtbrief
fret arien
poste arienne
nolo aereo
posta aerea
amendment
applicant (for a doc. credit)
approval
arrive
assignment of proceeds
at sight
authenticate
authorization
average
Abnderung
Akkreditivsteller
Zustimmung
ankommen
Zession/Abtretung
bei Sicht
beglaubigen
Ermchtigung
Havarie/Beschdigung
modification (amendement)
donneur dordre
approbation
arriver
cession
vue
lgaliser
autorisation
avarie
modifica
ordinante
approvazione
arrivare/giungere
cessione
a vista
legalizzare
autorizzazione
avaria
aviso
avisar
carta de porte area
(gua area)
flete areo
correo areo
carta de porte area
(gua area)
modificacin
ordenante
aprobacin
llegar
cesin
a la vista
legalizar
autorizacin
avera
contre-accrditif
garantie bancaire
porteur
bnficiaire
bnficiaire
garantie la soumission
(caution provisoire)
lettre de change
aval
connaissement
acheteur
petite vitesse
contro-accreditivo
garanzia bancaria
portatore
beneficiario
beneficiario
Bid Bond
contra-acreditivo
garanta bancaria
portador
beneficiario
beneficiario
caucin provisoria
bill of exchange
bill of exchange guarantee
bill of lading
buyer
by goods train
Gegenakkreditiv
Bankgarantie
Inhaber
Akkreditivbegnstigter
Begnstigter
Offertgarantie/Bietungsgarantie
Wechsel
Aval
Konnossement
Kufer
Frachtgut
cambiale
avallo
polizza di carico
acquirente/compratore
piccola velocit
letra de cambio
aval
conocimiento
comprador
pequea velocidad
C
cancellation
cargo
carrier
case
address in case of need
certificate of analysis
certificate of quality
chamber of commerce
charges
Annullierung
Ladung
Frachtfhrer
Kiste
Notadresse
Analysenzertifikat
Ursprungszeugnis
Qualittszertifikat
Handelskammer
Spesen
annulation
cargaison
transporteur
caisse
adresse notifier
certificat danalyse
certificat dorigine
certificat de qualit
chambre de commerce
frais
annullamento
carico
vettore
cassa
indirizzo per la notifica
certificato danalisi
certificato dorigine
certificato di qualit
camera di commercio
spese
anulacin
carga
transportador
caja
direccin de notificacin
certificado de anlisis
certificado de origen
certificado de calidad
cmara de comercio
gastos
B
back-to-back credit
bank guarantee
bearer
beneficiary (of a doc. credit)
beneficiary (of a guarantee)
bid bond
119
120
English
German
French
Italian
charter party B/L
Charter-Party-Konnossement
connaissement charte-partie polizza di carico charter

party
CFR = cost and freight

CIF = cost, insurance and
freight
claim (under a guarantee)
clean
COD = cash on delivery
CFR = Kosten und Fracht

CIF = Kosten, Versicherung
und Fracht
lnanspruchnahme
rein
COD = Nachnahme
collecting bank
Inkassobank
collection
combined transport
commercial letter of credit
Inkasso
kombinierter Transport
Handelskreditbrief
commercial invoice
commission
compensation transaction
conditions
to confirm
confirmed L/C/doc. credit
confirmation
consignee
consignor
consular invoice
contract
contract of sale
correspondent bank
creditor
currency
customs duty
Handelsrechnung
(Handelsfaktura)
Kommission
Kompensationsgeschft
Bedingungen
besttigen
besttigtes Akkreditiv
Besttigung
Empfnger
Absender
Konsularfaktura
Kontrakt/Vertrag
Kaufvertrag
Korrespondenzbank
Glubiger
Whrung
Zollgebhr
D
damage by sea
date of dispatch
date of issuance
date of loading
date of payment
date of shipment
deadline
deferred payment
deliver
delivery
delivery order
description
discount
discrepancy
to dispatch
documentary collection
documentary credit
documents against
acceptance (D/A)
documents against payment
(D/P)
draft
drawee
drawer (of a bill of exchange)
due date
Havarie
Versanddatum
Ausstellungsdatum
Verladedatum
Zahlungsziel
Verschiffungsdatum
Frist
aufgeschobene Zahlung
liefern/aushndigen
Lieferung/Aushndigung
Lieferschein
Bezeichnung
Diskont, diskontieren
Unstimmigkeit
absenden/senden
Dokumentar-Inkasso
Dokumenten-Akkreditiv
Dokumente gegen
Akzept (D/A)
Dokumente gegen Zahlung
(D/P)
gezogener Wechsel/Tratte
Bezogener
Aussteller (von Wechseln)
Flligkeit
Spanish
conocimiento de embarque
chrter (c. de e. con
contrato de fletamento)
CFR = cot et fret
CFR = costo e nolo
CFR = costo y flete
CIF = cot, assurance et fret CIF = costo, assicurazione e CIF = costo, seguro y flete
nolo
appel/demande de paiement domanda
aviso/demanda de pago
net
pulito, clean
limpio
COD = livraison contre
COD = incasso alla
COD = reembolso
remboursement
consegna
banque charge de
banca dincasso
banco cobrador (banco
Iencaissement
encargado de la cobranza)
encaissement
incasso
cobranza
transport combin
trasporto combinato
transporte combinado
lettre de crdit commerciale lettera di credito commercarta de crdito comercial
ciale
facture commerciale
fattura commerciale
factura comercial
commission
affaire de compensation
conditions
confirmer
accrditif confirm
confirmation
destinataire
expditeur
facture consulaire
contrat
contrat dachat
banque correspondante
crancier
monnaie
droits de douane
commissione
affare di compensazione
condizioni
confermare
accreditivo confermato
conferma
destinatario
mittente
fattura consolare
contratto
contratto di compravendita
banca corrispondente
creditore
valuta (moneta)
diritti doganali
comisin
negocio de trueque
condiciones
confirmar
carta de crdito confirmada
confirmacin
destinatario
expedidor
factura consular
contrato
contrato de compraventa
banco corresponsal
acreedor
moneda
derechos de aduana
avarie
date dexpdition
date de lmission
date de chargement
dlai de paiement
date dembarquement
dlai
paiement diffr
remettre/livrer
remise/livraison
bon de livraison
dsignation
escompte, escompter
divergence
expdier
encaissement documentaire
crdit documentaire
documents contre
acceptation (D/A)
documents contre paiement
(D/P)
Iettre de change/traite
tir
tireur
chance
avaria
data di spedizione
data di emissione
data di carico
termine di pagamento
data dimbarco
termine
pagamento differito
fornire/consegnare
fornitura/consegna
bolletta di consegna
descrizione
sconto, scontare
divergenza/irregolarit
spedire/inviare
incasso documentario
credito documentario
documenti contro
accettazione (D/A)
documenti contro pagamento (D/P)
cambiale tratta/tratta
trassato/trattario
traente
scadenza
avera
fecha de expedicin
fecha de expedicin
fecha de cargar
plazo para el pago
fecha de embarque
plazo
pago diferido
entregar
entrega
orden de entrega
descripcin
descuento, descontar
divergencia
expedir
cobranza documentaria
documentos contra
aceptacin (D/A)
documentos contra pago
(D/P)
giro/letra de cambio
girado
girador
vencimiento
English
German
French
Italian
Spanish
duplicate
duplicate rail consignment
note
Duplikat
Duplikat-Frachtbrief
duplicata
duplicata de lettre de voiture
duplicato
duplicato della lettera di
vettura
duplicado
duplicado de carta de porte
ferroviaria
E
to endorse
endorsement
escrow account
evidence account
to expire
expiry date
indossieren
Indossament
Escrow Account
Nachweiskonto
erlschen/vefallen
Verfalldatum
girare
girata
escrow account
evidence account
scadere
data di scadenza
endosar
endoso
escrow account
evidence account
caducar/vencer
fecha de vencimiento
exporter
express goods
ex station
extension
ex rail
Exporteur
Eilgut
ab Station
Prolongation/Verlngerung
ab Waggon
endosser
endossement/endos
escrow account
evidence account
expirer
date dexpiration/date
dchance
exportateur
grande vitesse
ex gare
prolongation/prorogation
ex wagon
exportador
gran velocidad
ex estacin
prrroga
ex vagn
ex warehouse
ex works
ab Lager
ab Fabrik
ex magasin
ex usine
esportatore
grande velocit
franco stazione
proroga/estensione
franco carro ferroviario,
franco vagone
franco magazzino
franco fabbrica
FAS = frei Lngsseite des

Schiffs
FIO = frei ein und aus
Generalpolice
FOB = frei an Bord
hhere Gewalt
Devisen
FAS = franco le long du

navire
FIO = free in and out
police dabonnement
FOB = franco bord
force majeure
devises
FAS = free along-side

ship/franco banchina nave
polizza flottante
FOB = franco a bordo
forza maggiore
divise
Spediteur
Spediteur-bernahmebescheinigung
Spediteur-Versandbescheinigung
Spediteurbescheinigung
transitaire/transporteur
attestation de prise en
charge de lexpditeur
attestation dexpdition dun
transitaire dello spedizioniere
rcpiss du transitaire
spedizionere
ricevuta dello spedizioniere
FPA = frei von Beschdigung

Rahmenvertrag
franko Grenze
Fracht
unfranko
voller Satz
FPA = franc davarie

particulire
contrat type
franco frontire
fret
port d
jeu complet
FPA = franco davaria

particolare
contratto quadro
franco confine
nolo
porto assegnato
gioco completo
FAS = libre al costado del

barco
pliza flotante
FOB = libre a bordo
fuerza mayor
divisas (monedas
extranjeras)
agente de transportes
certificado de recibo de
certificado de expedicin de
recibo de un agente de
transportes
FPA = franco de avera
particular
contrato tipo
franco frontera
flete
porte debido
juego completo
Ware
Bruttogewicht
Sammelwaggon
marchandise
poids brut
wagon groupage
merce
peso lordo
vagone collettame
mercanca
peso bruto
vagn colectivo
Garantiesumme
Garant/Brge
somme garantie
garant
somma garantita
garante
cantidad de garanta
garante
honorieren
Hausluftfrachtbrief
honorer
mise par un transitaire
onorare
honrar
gua area expedida por
emessa da uno spedizioniere transportador
F
FAS = free along-side ship
floating policy
FOB = free on bord
force majeure
foreign exchange/foreign
currency
forwarder/forwarding agent
forwarders certificate of
receipt
forwarders certificate of
transport
forwarders receipt
FPA = free from particular
average
framework agreement
free border
freight
freight unpaid
full set
G
goods
gross weight
groupage wagon (combined
load)
guarantee amount
guarantor
H
to honor
house air waybill
dichiarazione di trasporto
ricevuta del trasportatore
ex almacn (ex bodega)

ex fbrica
121
English
German
French
Italian
Spanish
importateur
en vrac
augmentation
certificat dinspection
assurance contre tous
risques
certificat dassurance
dclaration dassurance
police dassurance
assurer
International Standby
Practices ISP98
titre fiduciaire
importatore
alla rinfusa
aumento
certificato dispezione
assicurazione contro tutti i
rischi
certificato di assicurazione
dichiarazione dassicurazione
polizza dassicurazione
assicurare
importador
a granel
aumento
certificado de inspeccin
seguro contra todo riesgo
insurance certificate
insurance declaration
insurance policy
to insure
Practices ISP98
in trust
Importeur
lose
Erhhung
Inspektionszertifikat
Versicherung gegen alle
Risiken
Versicherungszertifikat
Versicherungsdeklaration
Versicherungspolice
versichern
Practices ISP98
zu getreuen Hnden
a titulo fiduciario
invoice
irrevocable
to issue (a credit)
to issue (a document)
issuing bank
Faktura/Rechnung
unwiderruflich
erffnen
ausstellen
Akkreditivbank
facture
irrvocable
ouvrir
tablir (mettre)
banque mettrice
a mani fidate/a titolo

fiduciario
fattura
irrevocabile
aprire
emettere/trarre
banca emittente
J
jurisdiction
Zustndigkeit/Gerichtsstand comptence (judiciaire)/for
competenza/giurisdizione di
un tribunale/foro
lugar de jurisdiccin
competente/foro
L
legalize
letter of credit
letter of indemnity
Iiability
to load
legalisieren/beglaubigen
Akkreditiv/Kreditbrief
Revers (Haftungserklrung)
Haftung
beladen
lgaliser
lettre de crdit
Iettre rversale
responsabilit
charger
legalizzare
accreditivo/lettera di credito
modulo di rivalsa
responsabilit
caricare
legalizar
carta de crdito
carta de indemnidad
responsabilidad
cargar
M
maker (of a bill of exchange) Aussteller (von Wechseln)
maturity
Flligkeit
merchandise
Ware
tireur
chance
marchandise
traente
scadenza
merce
girador
vencimiento
mercanca
N
negotiable letter of credit
Negoziierungsakkreditiv
accrditif ngociable
crdito negociable
to negotiate
net weight
notice of defects
negoziieren
Nettogewicht
Mngelrge
notify address
Meldeadresse (notify)
ngocier
poids net
action de garantie/avis pour
Iivraison dfectueuse
adresse notifier
negoziabile
negoziare
peso netto
ricorso in garanzia
O
objections/defences
on board
on board B/L
Einreden/Einwendungen
an Bord
Bordkonnossement
exceptions/objections
bord
connaissement bord
on deck
on first demand
open
order
an Deck
auf erstes Verlangen
erffnen
Auftrag/Order
en ponte (sur le pont)

premire rquisition
ouvrir
ordre
I
importer
in bulk
increase
inspection certificate
insurance against all risks
122
indirizzo per la notifica
eccezioni/obiezioni
a bordo
polizza di carico per merce
a bordo
sopra coperta
a prima richiesta
aprire
ordine
certificado de seguro
declaracin de seguro
pliza de seguro
asegurar
factura
irrevocable
abrir
expedir/establecer
banco emisor
negociar
peso neto
reprimenda por falta/
reclamacin por vicios
direccin notificacin/
domicilio para efectos de
notificacin
objeciones
a bordo
conocimiento de embarque
a bordo
sobre cubierta
a primera demanda
abrir
orden
English
German
French
Italian
Spanish
P
package
packing
packing list
paid
parallel transaction
partial delivery/shipment
partial guarantee
to pay
payment
payment obligation
payment on first presentation
performance bond
period of validity
port
postage
postage certificate
Kolli
Verpackung
Packliste
bezahlt
Parallelgeschft
Teillieferung
Teilgarantie
bezahlen
Zahlung
Zahlungsverpflichtung
Zahlung bei erster
Vorweisung
Erfllungsgarantie
Gltigkeitsdauer
Hafen
Porto
Postversandbescheinigung
Postquittung
vorausbezahlt
vorlegen
Einreichung/Vorlage
vorlegende Bank
Einreicher
colis
emballage
liste de colisage
pay
affaire parallle
expdition partielle
garantie partielle
payer
paiement
engagement de paiement
payable sur premire
prsentation
garantie de bonne excution
dure de validit
port
port
attestation dexpdition par
poste
rcpiss postal
pay davance
prsenter
prsentation
banque prsentatrice
donneur dordre
collo
imballaggio
distinta dimballaggio
pagato
affare parallelo
spedizione parziale
garanzia parziale
pagare
pagamento
impegno di pagamento
pagamento a prima
presentazione
garanzia di esecuzione
periodo di validit
porto
porto
attestato di spedizione
postale
ricevuta postale
pagato anticipatamente
presentare
presentazione
banca cedente
ordinante
bulto
embalaje
lista de empaque
pagado
negocio paralelo
envo parcial
garanta parcial
pagar
pago
obligacin de pago
pago a la primera
presentacin
garanta de cumplimiento
duracin de validez
puerto
franqueo
comprobante de envo por
correo
recibo de encomienda postal
pagado por anticipado
presentar
presentacin
banco cedente
remitente/presentador
Auftraggeber
Hauptschuldner
Proforma-Rechnung
Eigenwechsel
Protest
donneur dordre
dbiteur principal
facture pro forma
billet ordre
prott
datore dordine/ordinante
debitore principale
fattura proforma
vaglia cambiario/pagher
protesto
ordenante (por orden de)

deudor principal
factura proforma
pagar
protesta
Menge
quantit
quantit
cantidad
Bahn
Bahnfrachtbrief
chemin de fer
lettre de voiture ferroviaire
ferrovia
lettera di vettura ferroviaire
ferrocarril
carta de porte ferroviaria
Waggon
Quittung
Empfangsstempel
Regress/Rckgriff
Rembours/Erholung
zurckweisen
Einreicherbank
wagon
reu (quittance)
timbre de rception
recours
remboursement
refuser
banque remettante
vagone
ricevuta
timbro di ricezione
regresso
rimborso
rifiutare
banca ordinante
reserve
revocable
revolving credit
Vorbehalt/Vorweisung
widerruflich
revolvierendes Akkreditiv
rserve
rvocable
revolving credit
risk
Risiko
risque
riserva
revocabile
revolving credit
(credito rotativo)
rischio
vagn
recibo
sello de recepcin
recurso
reembolso
rechazar/rehusar
banco remitente/
presentador
reserva
revocable
credito rotativo (revolviendo)
postal receipt
prepaid
present
presentation
presenting bank
principal (documentary
collection)
principal (guarantee)
principal debtor
pro forma invoice
promissory note
protest
Q
quantity
R
railway
railway bill/railroad bill of
lading/duplicate of rail
consignment note
railway truck/car
receipt
reception stamp
recourse/regress
reimbursement
to reject
remitting bank
riesgo
123
English
German
French
Italian
Spanish
Muster (Pl.)
Seefracht
seemssige Verpackung
Zweitbegnstigter
Verkufer
senden
verschiffen
Ladung
Schifffahrtsgesellschaft
Verschiffungsdatum
Sichtakkreditiv
SRCC = Streik, Aufruhr,
politische Unruhen
abgestempelt
Dampfer
verstauen
Streik
chantillons
fret maritime
emballage maritime
bnficiaire en second
vendeur
envoyer
embarquer
cargaison
compagnie maritime
date dembarquement
accrditif vue
SRCC = grves, meutes,
troubles civils
estampill
vapeur
arrimer
grve
campioni
nolo marittimo
imballaggio marittimo
secondo beneficiario
venditore
inviare
imbarcare
carico
compagnia marittimo
data dimbarco
accreditivo a vista
SRCC = scioperi, ammutinamenti e sommosse civili
stampigliato
vapore
stivare
sciopero
muestras
flete martimo
embalaje martimo
segundo beneficiario
vendedor
enviar
embarcar
carga
compana martimo
fecha de embarque
crdito a la vista
SRCC = huelgas, motines,
conmociones civiles
timbrado
vapor
estibar
huelga
Lieferant
Brgschaft
fournisseur
acte de cautionnement
(caution)
fornitore
(atto di) fideiussione
suministrador
garanta
tlgramme
tlex
garantie de soumission
telegramma
telex
garanzia dellofferta
telegrama
tlex
caucin provisoria
terms
through B/L
time of delivery
to order
TPND = theft, pilferage,
non-delivery
transfer
transferable
transferred credit
translation
transhipment/transhipment
truck waybill (CMR)
Telegramm
Telex/Fernschreiben
Offertgarantie/Bietungsgarantie
Bedingungen
Durchkonnossement
Lieferfrist
an Order
TPND = Diebstahl, Plnderung, Abhandenkommen
bertragung
bertragbar
bertragungsakkreditiv
bersetzung
Umladung
Lastwagenfrachtbrief (CMR)
conditions
through B/L
dlai de livraison
lordre
TPND = vol, pillage,
non-delivrance
transfert
transfrable
accrditif transfr
traduction
transbordement
Iettre de transport routier
(CMR)
condizioni
polizza di carico diretta
termine di consegna
allordine
TPND = furto, saccheggio,
mancata
trasferimento
trasferibile
credito trasferito
traduzione
trasbordo
lettera di vettura per
trasporto via strada (CMR)
condiciones
through B/L
plazo de entrega
a la orden
TPND = robo, pillaje y falta
de entrega
transferencia
transferible
crdito transferido
traduccin
transbordo
carta de porte de camin
(CMR)
U
unconfirmed letter of credit
under deck
undertaking
Uniform Customs and
Practice for Documentary
Credits (UCP)
Uniform Rules for Collections (URC)
unbesttigtes Akkreditiv
unter Deck
Verpflichtung
Einheitliche Richtlinien und
Gebruche fr DokumentenAkkreditive (ERA)
Einheitliche Richtlinien fr
Inkassi (ERI)
accrditif non confirm

sous couvert (sous le pont)
engagement
Rgles et usances uniformes
relatives aux crdits documentaires (RUU)
Rgles uniformes relatives
aux encaissements (RUE)
accreditivo non confermato

sotto coperta
impegno
Norme ed usi uniformi
relativi ai crediti documentari
(NUU)
Norme uniformi relative agli
incassi documentari (NUI)
Vertragsgarantien
auf Anfordern zahlbare
Garantien
abladen/ausladen
Rgles uniformes pour les

garanties contractuelles
Rgles uniformes de la CCI
relatives aux garanties sur
demande
dcharger
Norme uniformi per le

garanzie contrattuali
crdito no confirmado
bajo cubierta
compromiso
Reglas y usos uniformes
para crditos documentarios
(RUU)
Reglas uniformes para
cobranzas documentarias
(RUC)
Reglas uniformes para
garantas de contratos
scaricare
descargar
S
samples
sea freight
seaworthy packing
second beneficiary
seller
to send
to ship
shipment
shipping company
shipping date
sight letter of credit
SRCC = strikes, riots, civil
commotions
stamped
steamer (s/s)/vessel
to stow
strike
Supplement to UCP 600 for
Electronic Presentation
(eUCP)
supplier
surety bond
T
telegram
telex
tender bond
Uniform Rules for Contract

Guarantees
Uniform Rules for Demand
Guarantees
to unload
124
English
German
French
Italian
Spanish
V
valid until
validity
value date
venue
gltig bis
Gltigkeit
Valuta/Wert
Gerichtsstand
valable jusqu
validit
valeur
for
valido fino
validit
valore/valuta
foro competente
vessel
Schiff
navire
nave
vlido hasta
validez
valor
foro/lugar de jurisdiccin
competente
barco
W
WA (WPA) = with particular
average
warehouse
warehouse keepers warrant
warehouse receipt
to weigh
weight certificate
weight list
without charges
working day
work progress certificate
WA (WPA) = einschliesslich
Beschdigung
Lager(haus)
Lagerschein
Lager(haus)empfangsschein
wiegen
Gewichtszertifikat
Gewichtsliste
kostenfrei
Arbeitstag
Arbeitsfortschrittsausweis
WA (WPA) = avec avarie

particulire
magasin/entrept
certificat de dpt
rcpiss dentrept
peser
certificat de poids
liste de poids
sans frais
jour ouvrable
certificat davancement
des travaux
CA (CAP)/WA (WPA) =
con avaria particolare
magazzino/deposito
fede di deposito
ricevuta di deposito
pesare
certificato di peso
distinta pesi
senza spese
giorno lavorativo
certificato di progresso
del lavoro
WA (WPA) = con avera

particular
almacn
resguardo de almacn
certificado de almacn
pesar
certificado de peso
lista de pesos
sin gastos
da hbil
certifiado de progreso
de trabajo
125
Index
A
About 43, 46
Acceptance 10, 23, 68, 75, 84
Acceptance credit 13, 23
Acceptance with documents against payment 77, 85
Accompanying documents 13, 53, 60
Advance 23 et seq.
Advance payment guarantee 11
Advice 13, 25, 47 et seq. et seq.92
Air waybill 60
Alterations to bills of lading 56
Amendment of a documentary credit 26, 48, 77
Applicant for a documentary credit 19 et seq.
Application for a documentary credit, see credit application
Approximately 43, 46
Assignment of proceeds of a documentary credit 13, 35
Aval, see bill of exchange guarantee
B
Back-to-back credit 13, 35
Bank guarantee 3, 11, 24
Barter 96
Basic forms of documentary credit 13, 19 et seq.
Bearer documents 53
Beneficiary
of a documentary credit 15 et seq., 76
Bill of exchange 9, 10, 23, 38, 44, 53 et seq., 75, 81, 85, 88, 90
Bill of exchange guarantee 85
Bill of lading 15, 44, 53 et seq., 55 et seq., 64, 70, 81, 87, 90
B/L, see bill of lading
Brokers cover note 68
C
Carrier 54 et seq.
Case-of-need 89
Certificate of analysis 44, 72
Certificate of origin 72, 81
Certificate of quality 44
CFR (cost and freight) 18, 45
Charter party bill of lading 56
CIF (cost, insurance and freight) 18, 44, 45, 68
Circa, see about
Collecting bank 81 et seq.
Collection order 79, 81 et seq.
Commercial invoice 25, 44, 53, 70, 72
Commissions
for documentary collections 92
for documentary credits 77
Compensation transaction 93, 97 et seq.
Compliance with documentary requirements 13, 52
Compliance with time limits 13, 52
Confirmed credit 8, 13, 19, 43, 75
Consular invoice 70
Correspondent bank 16 et seq.
Costs
of documentary collections 92
of documentary credits 77
Countertrade 1, 97 et seq.
Credit application 13, 42
Currency hedging 5, 47 also forward foreign
exchange contract
126
D
D/A, see documents against acceptance
D/P, see documents against payment
Deferred payment credit 13, 23 et seq., 77
Delivery terms 18, 45, 68
Demand guarantee 11
Description of goods 47
Discounting 23, 75
Discrepancies
in documentary credits 48
in documents 13, 79
Documentary collection 3, 10, 79, 81 et seq.
Documentary credit 3
Documents against acceptance 79, 85 et seq.
Documents against payment 79, 85 et seq.
Documents made out to a named person 53 et seq., 56, 58, 64
Documents of evidence, see accompanying documents
Documents of title 13, 15, 53
Draft 23, 54, see also bill of exchange
Drawee 81, 85
E
Endorsement 44, 53, 54, 90
Escrow account 96, 97 et seq.
Establishing the credit terms 28, 39
Establishing the terms of collection 79, 81, 82, 85
Evidence account 96, 101
Exchange risk 6, 19, 43, 46, 92
Expiry date of a documentary credit 25, 26, 43 et seq.
Export Risk Guarantee (ERG) 9
F
FOB (free on board) 18, 45, 47, 56, 58, 64, 70
Forfaiting 9
Forward foreign exchange contract 46
Full set 54 et seq.
G
Guarantee 3, 11 et seq.
Guarantor 10, 85
Guarantor bank 10
H
Hedging 5, 43, 47
I
Incoterms 45
Inspection certificate 72
Insurance certificate 68
Insurance documents 44, 53, 68, 87
Invoice, see commercial invoice
Irrevocable credit 13, 18 et seq., 25, 47
Issuing a documentary credit, see opening a documentary credit
Issuing bank 16 et seq., 24, 39, 42 et seq., 75
L
Legal basis
of documentary collections 84
of documentary credits 18
M
Manufacturing risk 6
Methods of settlement 20, 39
Middleman, see trader
Multimodal transport document 64 et seq.
N
Negotiable instrument 38
Negotiation 23
Negotiation credit 23 et seq., 75
Notification of issue of a documentary credit 28, 47 et seq.
Notify party 44
O
On board bill of lading 54
On deck loading 43, 56, 58, 64, 68
Open account 7, 10, 81
Opening a documentary credit 39
Order documents 53
Original credit 25 et seq., 31, 35, 53
Overdraft facility 101
P
Packing list 53, 72
Parallel transaction 96, 101
Partial shipment/delivery 24, 26, 38, 46
Parties to a documentary collection 81
Parties to a documentary credit 16 et seq.
Part-shipment, see partial shipment
Paying agent 35
Payment guarantee 10, 95
Payment under reserve 75
Performance bond 11, 95
Performance risk
Period of validity of documentary credits 18
Political risk 6
Presenting bank 81 et seq.
Presentation of documents 81 et seq.
Protection against non-performance 11
Protection against risks 7
Protest 10, 89, 92
S
Second beneficiary 25 et seq.
Settlement 75
Shipped bill of lading 54 et seq.
Shipping date 45, 52
Sight credit 20
Special arrangements involving documentary credits
20 et seq., 38
Standby credit 24, 38
Substitution of invoices 25
T
Tender bond 11, 95
Term bill of exchange 23, 47
Through bill of lading 54
To order 44, 53, 56
Trader 25, 28
Transfer risks 6, 19, 92
Transferable credit 25 et seq.
Transferring bank 25 et seq.
Transmission of documents 81, 87 et seq.
Transhipment 46
Transport documents 40 et seq., 52 et seq., 60 et seq.
Types of documentary credit 20, 23
U
UCP, see Uniform Customs and Practice for Documentary Credits
Unconfirmed credit 19, 23
Uniform Customs and Practice for Documentary Credits
18, 105 et seq.
Uniform Rules for Collections 81, 115
URC, see Uniform Rules for Collections
Utilisation of a documentary credit 18 et seq.
V
Validity, see period of validity, expiry date
W
Warehouse keepers warrant 45, 44, 45, 53, 85
Warehouse receipt 53
Weight list, weight certificate 72
Work progress certificate 48, 53, 72
R
Rail consignment note 53, 62, 63
Received for shipment bill of lading 54
Remitting bank 10, 81 et seq.
Revocable credit 19, 25
Revolving credit 24, 38
Risks 6 et seq., 35, 68, 77
127
List of Figures
128
No.
1
2

3
4
5
6
7
8
9
10
Title
Risks Relating to the Contracting Party
Risks Relating to the Economic and/or Political Situation in the Country of the Contracting Party or in Other
Countries
Securing Payment
Securing Peformance
Documentary Credits and Documentary Collections both Have Their Specific Advantages
Stages in a Documentary Credit Transaction
Parties to the Documentary Credit
Procedure for a Sight Credit
Procedure for a Transferable Credit
Issuance of the Original Credit
Page
6
11
Advice of a Basic Documentary Credit
32
12
Transfer request from Intermediary
33
13
Notification of the Transferred Credit to the Bank of the Second Beneficiary
34
14
Procedure for an Assignment of the Proceeds of a Documentary Credit
36
15
Request to Issue a Declaration of Assignment
37
16
Types of Credit and Special Arrangements
38
17
a) Application for a Documentary Credit
40
17
b) Application for a Documentary Credit
41
18
Issue of an Irrevocable Credit with Request for Confirmation
49
19
Advice of an Irrevocable Documentary Credit
50
20
Confirmation of an irrevocable documentary credit
51
21
Bill of Exchange
55
22
Bill of Lading
57
23
Charter Party Bill of Lading
59
24
Air Waybill
61
25
Rail Consignment Note
63
26
Multimodal Transport Document
65
27
CMR International Waybill
67
28
Insurance Certificate
69
29
Commercial Invoice
71
30
Certificate of Origin
73
31
Documents Schedule
74
32
Costs of a Documentary Credit
77
33
Stages of a Documentary Collection
81
34
Procedure for a Documentary Collection
82
35
86
36
Advice of Documents Received for Collection/Acceptance
91
37
Procedure for a Compensation Transaction
98
6
7
8
10
15
16
21
28
31
Bibliography
EISEMANN,
Frderic/SCHTZE, Rolf A.
Das Dokumenten-Akkreditiv im Internationalen Handelsverkehr, 3rd
edition, completely revised and enlarged, Heidelberg 1989
GACHO, Wolfgang
Das Akkreditiv. Praktische Erluterungen fr Banken,
Handel und Industrie, Wiesbaden 1985
GMR, Charles J. (Ed.)
Trade Financing,
Euromoney Publications, 2nd edition, London 1986
GUTTERIDGE, H.C./MEGRAH, M.
The Law of Bankers Commercial Credits,
7th edition, London 1984
HANDBUCH des Geld-, Bank- und Brsenwesens
der Schweiz, 4th edition, Thun 1987, reprinted 1988
HARFIELD, Henry
Bank Credits and Acceptances, 5th edition, New York 1974
Uniform Rules for Collections,
ICC Publication No. 522, 1995
Uniform Rules for Demand Guarantees,
Uniform Customs and Practice for Documentary Credits,
Supplement to UCP 600 for Electronic Presentation,
ICC Publication No. 600E, 2007
130
International
Chamber of Commerce
lncoterms, International Rules for the Interpretation
of Trade Terms, ICC Publication No. 560, 2000
International Standby Practices ISP98,
The Problem of Clean Bills of Lading,
ICC Publication No. 283
MAHLER, Dirk H.
Rechtsmissbrauch und einstweiliger Rechtsschutz
bei Dokumentenakkreditiven und Akkreditiven auf
erstes Anfordern, Frankfurt/Berne 1986
RAITH, Raimund T.
Das Recht des Dokumentenakkreditivs in den USA
und in Deutschland, Bonn 1985
de ROOY, F.P.
Documentary Credits, Deventer 1984
VENTRIS, F.M.
Bankers Documentary Credits,
2nd edition, London 1983, 1st supplement, July 1985
WASSERMANN, Henning
Die Verwertung von Ansprchen aus Dokumentenakkreditiven, BadenBaden 1981
ZAHN/EHRLICH/NEUMANN
Zahlung und Zahlungssicherung im Aussenhandel,
7th edition, revised, Berlin/New York 2001

Documentary Credits Documentary Collections
Credit Suisse
www.credit-suisse.com
SOLS 2 4540004 8.2008
CREDIT SUISSE AG
P.O. Box
CH-8070 Zurich
Documentary Credits Documentary

Collections

Akkreditivbroschre en

Transféré par

Informations du document

Titre original

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Akkreditivbroschre en

Transféré par

Droits d'auteur :

Formats disponibles

Greater Security in International Trading

Documentary Credits Documentary Collections

SOLS 2 4540004 8.2008

Documentary Credits Documentary

10th revised edition, 2008

Risk and Security in International Trade

Instruments for Securing Payment

Case Study and Countertrade

For simplicity, masculine forms are used to designate both genders

Cost and freight

Cost, insurance and freight

European Free Trade Association

Supplement to UCP 600 for electronic presentation (English only)

International Chamber of Commerce

International Standby Practices 98

Swiss Code of Obligations

Uniform Customs and Practice for Documentary Credits

Uniform Rules for Collections

1. Risk and Security in International Trade

Protection against Risks

Instruments for Securing Payment: an Overview

Bank Guarantees as Protection against Non-Performance

Disputes Related to ICC Instruments

Risk and Security in International Trade

1. Risk and Security in International Trade

Risk and Security in International Trade

Trading firms that act as middlemen are concerned with both

Risks Relating to the Contracting Party (Fig. 1)

Cause of Loss to the Exporter

Manufacturing or performance risk

Importer cancels or unilaterally modifies

Cause of Loss to the Exporter

Contract currency depreciates against

Risk and Security in International Trade

C. Protection against Risks

Securing Payment (Fig. 3)

Bank pays when

Risk and Security in International Trade

Securing Peformance (Fig. 4)

The buyers and sellers ability to insist on effective security

usually bears the cost of the documentary credit.

Bank pays when

A buyer is therefore unlikely to apply for a documentary credit

Risk and Security in International Trade

D. Instruments for Securing Payment: an Overview

ingness to pay. Moreover, he can obtain liquid funds shortly after

Risk and Security in International Trade

fully covered. When he sends off the goods, he still has no

the guarantor bank, which will then be obliged to pay. This is

Risk and Security in International Trade

E. Bank Guarantees as Protection against Non-Performance

this type have become a very important feature of international

F. Disputes Related to ICC Instruments

Risk and Security in International Trade

2. Instruments for Securing Payment

Procedures and Participants

Issue of the Credit

Utilization of the Credit

Supplement to UCP 600 for Electronic Presentation

Instruments for Securing Payment

2. Instruments for Securing Payment

pared to grant a loan on the strength of a documentary credit if

Stages in a Documentary Credit Transaction (Fig. 6)